POLITICAL  ECONOMY 


FOR 


THE  PEOPLE, 


BY 

GEORGE    TUCKER, 
H 

FORMERLY  REPRESENTATIVE  IN  CONGRESS  FROM  VIRGINIA,  AND  PROFESSOR  OF 
MORAL  PHILOSOPHY  IN  THE  UNIVERSITY  OF  VIRGINIA. 


LI  B  U  A  It  Y 

I '  X  1  V  I •:  |i^J  T  V    < »  I-' 

CALIFORNIA. 


PHILADELPHIA: 
PRINTED    BY    C.  SHERMAN   &    SON. 

1859. 


\ 


,    \ 


Entered,  according  to  Act  of  Congress,  in  the  year  1859,  by 

GEORGE  TUCKER, 

in  the  Clerk's  Office  of  the  District  Court  of  the  United  States  for  the  Eastern  District  of 
Pennsylvania. 


PREFACE. 


THE  following  pages  are,  in  substance,  a  compen 
dium  of  the  lectures  on  Political  Economy  delivered 
by  the  author  in  the  University  of  Virginia,  with 
such  alterations  and  additions  as  his  further  experi 
ence  and  reflection  have  suggested. 

They  are  now  offered  to  the  public  under  the 
belief  that  the  subject  is  one  of  peculiai*  importance 
to  a  free  people,  whose  will  often  directs  and  controls 
the  policy  of  the  State ;  and  who,  when  they  do  not 
exert  that  influence,  ought  to  know  how  far  the  sen 
timents  of  the  candidates  for  their  favor  are  in  ac 
cordance  with  the  true  principles  of  national  pros 
perity. 

He  has  long  been  of  opinion  that  there  was  no 
principle  of  moment  in  this  science  on  which  men 
would  not,  in  time,  be  entirely  agreed.  Even  now 
there  are  a  hundred  uncontroverted  propositions  for 
one  which  is  the  subject  of  dispute. 

(iii) 


IV  PREFACE. 

In  his  notice  of  those  few,  he  has,  in  general,  con 
tented  himself  with  presenting  his  own  views,  without 
fully  stating  those  from  which  he  had  ventured  to 
differ ;  and  in  subjects  of  no  practical  importance,  he 
has  not  adverted  to  them  at  all.  He  was  led  to  this 
course  partly  for  the  sake  of  brevity,  and  partly 
because  he  wished  this  work  to  have  as  little  of  a 
controversial  character  as  possible. 

By  thus  omitting  the  arguments  which  have  been 
urged  on  contested  questions,  as  well  as  all  historical 
details,  he  flatters  himself  that  he  has  set  forth  all 
the  principles  that  are  important  to  the  national 
welfare. 

His  first  object  has  been  to  state  what  he  believed 
to  be  sound  theory ;  and  the  next,  to  make  it  clear, 
concise,  and  of  easy  application  to  the  affairs  of  social 
life.  He  dare  not  presume  that,  with  all  his  solici 
tude  for  truth,  he  has  always  escaped  error;  but 
whenever  it  shall  be  detected,  by  himself  or  others, 
lie  will  not  be  slow  to  make  the  correction. 

PHILADELPHIA,  Oct.  15,  1859. 


CONTENTS. 

CHAPTER  I. 

PHYSICAL  CAUSES  OF  NATIONAL  WEALTH. 

PAGE 

Nations  exhibit  great  diversity  of  civilization 21 

Their  condition  is  dependent  on  physical  and  moral  causes....  21 

The  principal  physical  causes  are  four 22 

Fertility  of  Soil — its  diversities 22 

The  proximate  causes  of  fertility 22 

It  may  be  increased  by  human  industry , 22 

Climate  —  its  influence  on  national  wealth 22 

Influence  of  heat  on  vegetation 23 

The  climate  affected  by  elevation 23 

Difference  between  the  east  and  west  coasts  of  continents 24 

Explanation  of  this  difference  24 

Mines  —  their  influence  on  national  wealth , 25 

Their  annual  addition  to  the  national  income 25 

This  does  not  indicate  the  whole  of  their  benefit 25 

Waters  —  contribute  to  the  national  wealth 26 

In  the  supply  offish 26 

In  facilitating  transportation 26 

In  supplying  a  motive-power 26 

CHAPTER   II. 

MORAL  CAUSES   OF   NATIONAL  WEALTH. 

There  are  principally  four  moral  causes 27 

Without  industry  the  bounty  of  nature  unavailing 27 

1*  (v) 


Vi  CONTENTS. 

It  is  employed  in  three  ways 27 

These  the  main  constituents  of  material  wealth 28 

II.  Skill  or  knoidecfge  —  above  the  average  degree 28 

By  this  he  has  obtained  the  materials  of  clothing 28 

Has  extracted  from  the  earth  metallic  ores 28 

Also  glass,  porcelain,  marble,  £c 28 

Has  enabled  himself  to  traverse  the  ocean 29 

The  achievements  of  his  skill  best  seen  in  its  results 29 

Great  skill  sometimes  exhibited  in  particular  places 29 

Examples  from  England,  France,  and  other  countries 29 

Knowledge  and  art  always  a  source  of  power  and  wealth 30 

III.  Frugality. — "Without  some  saving,  man  could  make  no 

progress 80 

He  could  acquire  no  capital 30 

Example  of  Holland 30 

Why  commercial  nations  are  commonly  rich 30 

IV.  Government. — Its  agency  necessary  to  national  prosperity,  31 
Man  will    not   be   industrious    or  frugal   under  a  rapacious 

government 31 

He  must  be  protected  from  foreign  violence 31 

And  from  domestic  injustice  and  fraud 31 

Contracts  must  be  strictly  enforced 31 

Governments  should  comply  with  their  own  engagements 31 

By  a  breach  of  faith  they  may  even  lose  in  a  pecuniary  view...  31 

But  a  loss  of  character  cannot  be  compensated 31 

Modes  by  which  governments  impede  national  prosperity 31 

They  sometimes  err  by  too  much  regulation 32 

The  forbearance  of  a  government  one  of  its  highest  attributes,  32 


CHAPTER  III. 

PRINCIPLES    OF  VALUE. 

Value,  what  in  Political  Economy 33 

Exchanges,  indispensable  to  all 34 

The  articles  exchanged  regarded  as  equivalents 35 

But  no  evidence  of  the  valuation  by  the  parties 35 


CONTENTS.  Vll 

Exchangeable  value  —  its  two  elements 35 

When  air,  light,  water,  and  heat,  have  value  in  exchange 36 

The  difficulty  of  attainment  of  two  kinds 37 

Examples  of  value  from  the  cost  of  production 37 

Examples  of  value  from  the  scarcity  of  the  article 37 

Monopolies,  what 38 

The  rule  as  to  price  in  monopolies 38 

All  articles  liable  to  fluctuation  of  price 38 

Supply,  what 38 

Demand,  what 39 

Addition  to  the  supply  lowers  price 39 

Addition  to  the  demand  raises  price 39 

Rise  of  price  sometimes  anticipated  by  sellers 39 

Change  of  price  not  proportional  to  change  of  supply 39 

Change  of  supply  produces  change  of  demand 40 

Example  from  gold  and  silver 40 

Error  of  Say  on  this  subject 40 

The  natural  demand,  what 41 

Illustration  from  the  price  of  hats 41 

Values  as  various  as  the  tastes  and  wants  of  man 42 

No  unvarying  standard  of  value 42 

Gold  and  silver  the  best  measures  for  the  same  time  and  place,  42 

But  their  value  varies  greatly  in  different  ages 43 

Labor  has  different  values  in  different  countries 43 

It  falls  with  the  increase  of  population 43 

Corn  varies  in  value  in  different  countries 43 

It  rises  in  value  with  the  increase  of  population 43 

Corn  and  labor  combined  considered  44 

Approximations  sufficient  for  practical  use 44 


CHAPTER  IV. 

PROGRESS    OF    SOCIETY. 

In  the  first,  or  Hunter  State,  land  had  no  value  in  exchange...     45 

Characteristics  of  savage  life 46 

Tribes  claimed  a  right  to  the  soil  they  occupied 47 


\iii  CONTENTS. 

The  means  of  subsistence  then  precarious 47 

Population  scarce  one  to  the  square  mile 48 

The  Pastoral  State,  how  it  probably  originated 48 

Its  population  compared  with  that  of  the  Hunter  State 49 

The  taming  of  such  animals  as  could  be  useful 49 

All  countries  not  suited  to  the  Pastoral  State 49 

The  North  American  Indians  might  never  have  been  pastoral,  49 

The  nations  of  Western  Asia  were  pastoral 50 

Transition  from  this  state  to  agriculture 51 

The  progress  hastened  by  the  art  of  making  iron 51 

The  conseouent  increase  of  population 52 


CHAPTER  V. 

RENT. 

When  land  first  became  private  property 53 

Its  annual  use  would  then  have  value,  or  afford  rent 53 

Rent,  the  value  of  the  product  beyond  the  cost  of  production,  53 

Labor,  from  its  relative  scarcity,  at  first  high 54 

Why  it  falls,  compared  with  raw  produce 54 

The  rise  of  raw  produce  causes  the  rise  of  rents 54 

Difference  of  fertility  unimportant  in  causing  rents 55 

It  merely  graduates  the  difference  of  rents 55 

The  resort  to  worse  soils  the  effect  of  a  previous  rise  of  rents,  55 

A  certain  degree  of  fertility  necessary  to  rent 56 

This  limit  gradually  extending  to  poorer  soils 56 

The  rise  of  raw  produce  checked  by  three  circumstances 56 

Extending  the  cultivation  to  inferior  soils 57 

Drawing  supplies  from  a  greater  distance 57 

Improving  soils  by  a  greater  outlay  of  capital 57 

All  these  are  the  effects,  not  the  causes,  of  rent 57 

Improvements  in  husbandry  tend  to  raise  rents 58 

The  contrary  proposition  examined 58 

The  consumption  of  corn  not  a  fixed  amount  in  value 59 

Improvements  in  transportation  tend  to  raise  rents 60 

Rents  are  lowered  by  a  decline  of  population 61 


CONTEXTS.  ix 

By  heavy  taxation  ......................................................  62 

Town  lots  —  the  source  of  their  rents  .............................  62 

The  origin  of  cities  and  towns  .......................................  62 

They  increase  with  the  density  of  population  .....................  62 

What  is  their  proportionate  population  in  the  United  States...  62 

What  in  England  ......................................................  63 

Their  peculiar  benefits  and  disadvantages  ..........................  63 

Their  tendency  to  increase  inevitable  ...........................  ....  63 

The  rule  which  determines  the  value  of  town  lots  ...............  63 

What  determines  the  rent  of  houses  in  town  .....................  64 

Why  the  profits  of  land  are  below  the  average  profits  of  capital,  64 

Ground-ren  ts  ..................................  .  .........................  64 


CHAPTER  VI. 

DIFFERENT   KINDS   OF   RENT. 

Owners  of  land  often  prefer  renting  to  cultivating  it  ............  66 

Advantage  of  long  over  short  leases  ................................  66 

In  the  United  States  lands  commonly  leased  from  year  to  year,  66 

Rents  sometimes  in  kind  —  different  rates  .........................  67 

Money  rents  —  the  best  mode  in  rich  countries  ..................  67 

Metayer  rents,  what  —  occasion  in  this  country  ....................  67 

Objections  to  them.     They  succeed  in  some  parts  of  Europe,  68 

Cultivation  by  slaves  ...................................................  68 

Where  land  is  cultivated  by  the  owner,  its  supplies  part  of  the 

rent  ...............................................................  68 

Mines  —  difference  between  them  and  land  ........................  69 

On  what  depends  the  ability  of  mines  to  yield  rent  .............  69 

Coal-mines  —  their  national  value  ....................................  69 

Iron-mines  —  their  value  ...............................................  70 

Mines  of  gold  and-  silver  sometimes  yield  rent  .........  ...........  70 

Salt-mines  —  the  value  of  this  mineral  ........................  ,  .....  71 

When  salt-works  yield  a  high  rent  ..................................  71 

Salt  may  in  time  be  obtained  wholly  from  the  ocean  .............  72 

Fisheries  sometimes  yield  a  high  rent  ..............................  73 

General  law  of  rent  ....................................................  73 


X  CONTENTS. 

CHAPTER  VII. 

LABOR. 

Man's  comforts  mainly  dependent  on  his  own  efforts 74 

Civilized  and  savage  men  compared 74 

Examples  of  man's  power  over  matter 74 

From  the  mineral  world 75 

From  the  animal       "     75 

From  the  vegetable  "     76 

Threefold  division  of  his  industry 77 

4 

CHAPTER  VIII. 

AGRICULTURAL   INDUSTRY. 

At  first,  agriculture  rude,  and  yielding  small  returns 78 

Then  rented  to  tenants 78 

Rents  at  first  low 78 

Gradual  fall  in  the  price  of  labor 79 

This  fall  necessarily  implied  by  the  rise  of  raw  produce 79 

To  suppose  the  rise  of  both,  a  contradiction 79 

Source  of  the  error 79 

Diversity  in  the  modes  of  human  subsistence 80 

Its  influence  on  the  numbers  a  country  can  support 80 

Different  rates  of  subsistence  in  different  stages  of  society 80 

The  decline  in  the  third  stage  not  inevitable 81 

Possible  effect  from  the  high  standard  of  comfort  here 81 

Argument  drawn  from  the  Census  of  the  United  States 81 

Inquiry  into  the  minimum  wages  of  labor 82 

Cultivation  by  slaves  —  difference  of  views 83 

Some  facts  opposed  to  theoretical  objections 84 

Emancipation  in  the  British  West  Indies 84 

Wise  course  of  some  slave-owners 85 

Slave-owners  fitted  for  the  exercise  of  authority 85 

Its  influence  on  manners  by  cherishing  self-respect 86 

Opinions  of  Jefferson  on  its  influence 86 


CONTENTS.  XI 

The  African  race  regarded  by  the  whites  as  inferior 87 

The  Southern  States  are,  therefore,  more  averse  to  emancipation,  87 

The  slaves,  however,  well  treated  and  happy 87 

This  institution  not  permanent  in  the  United  States 88 

It  will  disappear  here  as  serfdom  did  in  Europe 88 

The  value  of  a  slave  will  in  time  exceed  the  cost  of  rearing  him,  88 

This  is  inconsistent  with  the  continuance  of  slavery 88 

Estimate  of  our  population  in  less  than  eighty  years 88 

The  density  then  seventy  to  a  square  mile 89 

This  is  probably  greater  than  is  consistent  with  slavery 89 

Reference  to  a  former  hypothesis  on  this  subject 90 

How  far  affected  by  subsequent  changes 90 

The  present  high  price  of  slaves  does  not  affect  this  question..  90 

That  caused  by  the  high  price  of  cotton 90 

With  the  future  increase  of  slaves  cotton  must  fall  in  price...  90 

The  value  of  labor  varies  in  different  countries 91 

Effects  of  climate 91 

Of  moral  causes , 91 

Of  free  government 91 

Of  popular  education 92 

Raw  produce  is  furnished  principally  by  agriculture 92 

In  part  also  by  mining  and  fisheries 93 


CHAPTER  IX. 

MANUFACTURING   INDUSTRY. 

This  branch  most  requires  manual  adroitness 94 

Diversities  of  labor  and  skill  among  individuals 94 

Advantages  of  co-operation,  or  a  division  of  labor 94 

Illustration  from  the  manufacture  of  pins 95 

The  advantage  the  result  of  three  circumstances 95 

The  benefits  derived  from  machinery 95 

Illustration  from  the  card-making  machine 95 

The  cotton-gin — its  immense  national  .benefit 96 

The  English  improvements  in  spinning  and  weaving  cotton....  96 

The  value  of  labor  varies  from  several  circumstances 97 


xii  CONTENTS. 


Difference  of  skill  —  examples 97 

Its  greater  or  less  agreeableness 98 

Remuneration  to  clergymen 99 

Rewards  by  conferring  honors 99 

The  dangers  attending  an  occupation 100 

Moral  qualities  affect  the  rewards  of  labor ....  100 

Remuneration  of  public  functionaries . 100 

Of  superintendents 101 

The  unsteadiness  of  an  employment 101 

The  greater  or  less  probability  of  success 102 

The  learned  professions 102 

The  effect  of  irregularity  and  precariousness  of  reward 103 

The  influence  of  custom 10  i 

In  manufactures,  three  elements 104 

They  enter  different  manufactures  in  different  proportions 104 

In  no  long  time  this  country  must  manufacture  for  itself 105 

A  large  part  of  our  manufactures  now  supplied  by  commerce,  105 

This  commerce  must  be  modified  by  our  increase  of  numbers,  106 

In  two  duplications  our  population  will  be  120,000,000 106 

This  will  require  four  times  as  many  manufactures  as  now 106 

The  foreign  demand  for  our  exports  will  not  increase  as  much,  107 

It  may  hardly  meet  a  two-fold  increase 107 

A  part  of  the  labor  now  employed  in  agriculture  must  then  be 

transferred  to  manufactures 107 

Several  commodities  the  joint  product  of  agriculture  and  man 
ufactures  ..                                                                           .  108 


CHAPTER  X. 

COMMERCIAL   INDUSTRY. 

Commerce  caused  by  diversity  of  products  of  different  countries,  109 

Ry  its  exchanges  both  parties  are  benefited 109 

The  cost  of  carriage  causes  the  difference  of  value 110 

Advantage  of  canals,  roads,  and  other  facilities  of  transport...  110 

They  also  enlarge  the  sphere  of  the  market 110 

The  contributions  of  commerce  illustrated.,.  .  Ill 


CONTENTS.  Xlll 

Different  classes  of  mercantile  men 112 

In  some  trades  integrity  of  peculiar  importance 112 

Error  of  the  mercantile  system  as  to  gold  and  silver 113 

Error  as  to  the  balance  of  trade 114 

But  the  correction  of  this  error  may  lead  to  an  opposite  one...  114 

Excess  of  imports  may  indicate  national  extravagance 115 

Commerce  between  the  United  States  and  Great  Britain 115 

This  trade  justifies  a  high  impost 115 

Two  modes  of  supplying  manufactures 116 

Each  has  its  advocates 116 

The  tariff  question  —  the  parties  geographically  divided 116 

Arguments  in  favor  of  protection 116 

Arguments  in  favor  of  free  trade 118 

In  what  case  protection  is  clearly  expedient 120 

When  it  is  clearly  both  unjust  and  injurious 120 


CHAPTER  XI. 

MENTAL    INDUSTRY. 

The  importance  of  mental  labor  to  the  best  interests  of  the  State,  121 

Public  functionaries;  their  rewards  partly  in  the  honor  conferred,  121 

Lawyers,  the  chance  of  political  preferment  a  part  of  their  reward,  121 

Their  professional  remuneration  high 122 

Physicians,  their  rewards — success  of  quacks 122 

Surgeons — dentists 123 

Professors 124 

Civil  engineers 125 

Why  inventors  are  often  ill  rewarded 125 

The  remuneration  of  authors  commonly  small 126 

Cases  of  exception 127 

The  ministers  to  our  pleasure  are  well  rewarded 127 

The  cultivators  of  the  fine  arts 127 

The  pecuniary  reward  should  be  liberal  but  not  very  high 128 

That  of  legislators  considered 129 

Their  compensation  should  not  be  very  high  nor  very  low 129 

The  change  of  compensation  should  be  always  prospective 130 

2 


CONTEXTS. 


Strange  instance  of  popular  inconsistency  .........  ...............  130 

Examples  of  diversified  forms  of  useful  human  labor  ...........  131 

They  show  man  to  be  the  artificer  of  his  own  condition  .........  132 


CHAPTER   XII. 

CAPITAL. 

Capital  —  of  what  it  consists 133 

It  contributes  to  production  in  three  ways 133 

It  is  divided  into  circulating  and  fixed 135 

Circulating  capital,  what 135 

Fixed  capital,  what 135 

The  profits  of  capital  indicated  by  the  interest  of  money 136 

Profits  often  comprehend  the  rewards  of  labor 136 

Why  interest  was  once  deemed  immoral 136 

Allowed  after  men  became  commercial  and  industrious 136 

Money  as  much  entitled  to  interest,  as  land  to  rent 136 

It  is  also  a  just  reward  to  abstinence  and  forbearance 137 

It  is  higher  or  lower,  according  to  the  supply  and  demand 137 

It  is  high  in  newly-settled  countries 137 

It  tends  to  fall  with  the  progress  of  population 137 

It  is  sometimes  high  from  the  exactions  of  the  government....  138 

It  is  high,  too,  from  the  indebtedness  of  a  country 138 

It  is  lower  for  large  loans  than  small  ones 139 

The  duration  of  the  loan  affects  the  rate  of  interest 139 

But  a  difference  between  large  and  small  loans 140 

No  necessary  connection  between  fall  of  interest  and  of  labor,  141 

Interest  may  be  high  where  population  is  dense  141 

Usury  laws  —  their  singular  policy 141 

They  tend  to  make  interest  higher 142 

They  lessen  the  amount  of  loanable  money 142 

They  induce  the  lender  to  demand  more  by  way  of  indemnity,  142 

They  also  increase  the  popular  odium  against  lenders 143 

High  interest,  when  legal,  as  unpopular  as  usury 143 

The  effect  of  the  repeal  of  the  usury  laws  considered 143 

It  would  make  the  laws  more  consistent 143 


C  0  X  T  E  X  T  S  .  XV 

It  would  take  from  the  borrower  the  inducement  to  act  dishon 
orably 1'43 

But  it  would  not  much  increase  the  loanable  capital 143 

Hence  the  repeal  has  disappointed  expectation 144 

The  repealing  law  has  been  soon  repealed 144 

It  might  be  wise  to  postpone  the  operation  of  the  repealing  law,  145 

The  injustice  to  the  moneyed  class  lessened  by  banks,  &c 145 

The  rate  of  interest  sometimes  raised  by  the  employment 146 

Inquiry  into  the  lowest  point  to  which  interest  can  fall 146 

The  transfer  of  capital  to  other  countries  checks  the  fall 148 


CHAPTER  XIII. 

MONEY. 

This  species  of  capital  has  functions  and  laws  of  its  own 149 

Its  origin 149 

Cattle,  salt,  cocoa,  £c.,  have  thus  become  a  currency 150 

Gold  and  silver  at  length  found  preferable  to  all  commodities..  151 
They  were  recommended  by  their  beauty,  scarcity,  and  utility,  152 
In  countries  not  able  to  produce  these  metals,  various  substi 
tutes  were  used 153 

The  useful  functions  of  money  are  very  great 154 

It  saves  much  time  and  trouble 154 

It  encourages  productive  industry 154 

It  aids  governments  in  collecting  and  disbursing  the  revenue..  154 

It  should  not  exceed  the  wants  of  the  community 155 

The  quantity  wanted  depends  on  the  number  and  value  of  the 

exchanges 155 

The  value  of  gold  and  silver  has  varied  in  different  ages 155 

Effect  of  the  discovery  of  America 155 

It  varies  in  different  countries  according  to  distance  from  the 

richest  mines 156 

Its  value  increased  by  the  expense  of  two  voyages 156 

The  quantity  wanted  in  a  country  increased  by  its  wealth 157 

Paper  money  lessens  the  amount  wanted 157 

It  is  also  affected  by  the  circumstances  of  local  traffic 157 


XVI  CONTENTS. 

The  disadvantages  of  a  redundant  currency 158 

In  the  United  States  it  produces  excessive  imports 159 

The  value  of  specie  does  not  vary  in  proportion  to  the  quantity,  160 

How  the  excess  is  counterbalanced 160 

How  the  deficiency  is  counterbalanced 160 

To  fit  gold  and  silver  for  currency  it  is  coined  by  the  Government,  161 

The  principal  regulations  of  the  United  States  Mint 161 

Denominations  and  value  of  the  coins 161 

The  decimal  divisions  —  popular  preference  for  the  binary 161 

Alloy  of  gold  and  silver — two  reasons  for 162 

Seignorage  of  the  mint,  what 162 

Advantages  of  a  seignorage 162 

Standards  of  value  —  different  rules  in  different  countries 162 

Disadvantages  of  a  double  standard 163 

Gold  and  silver  will  circulate,  though  not  a  legal  tender 164 

The  relative  value  of  the  two  metals  liable  to  change 165 

Effect  of  the  California  and  Australian  mines 165 

Estimate  of  the  consumption  of  gold 166 

It  greatly  exceeds  the  production 168 

A  depreciation  of  gold  must  be  the  consequence 168 

That  will  cause  a  decreased  supply  and  increased  demand 168 

The  depreciation  will  thus  finally  cease 168 

The  proportion  between  the  amount  produced  and  that  pre 
viously  existing 169 

Bank  paper  the  best  substitute  for  specie 169 


CHAPTER  XIII. 

BANKS. 

Two  kinds  of  banks 170 

Banks  of  deposit,  what , 170 

The  Bank  of  Amsterdam — its  history 170 

Banks  of  circulation,  what 171 

The  source  of  their  profits 171 

They  are  commonly  also  banks  of  deposit  and  discount 171 


CONTEXTS.  XV11 

The  usual  length  of  their  loans 172 

The  useful  functions  of  banks 173 

But  they  sometimes  cause  a  depreciated  currency 173 

Examples  in  1836  and  1857 174 

The  restrictions  commonly  imposed  by  themselves  or  the  stock 
holders 175 

Business  paper  and  accommodation,  what 175 

Why  the  former  should  be  preferred  in  their  loans 176 

Small  notes  are  injurious  to  the  public 176 

The  restrictions  advisable  in  their  charters 177 

They  should  have  an  adequate  capital 177 

It  should  be  paid  in  gold  or  silver  coin 177 

Their  suspension  of  specie  payments  should  subject  them  to 

penalties , 178 

Their  smallest  notes  should  be  prescribed 178 

Frequent  statements  of  their  condition  should  be  published...  179 

The  policy  of  "  free  banks/'  lately  created,  examined 179 

Some  think  banks  of  deposit  may  afford  a  better  currency......  180 

Several  objections  to  the  plan 180 

It  would  increase  the  consumption  of  gold  and  silver 181 

It.  would  be  the  same  for  the  time  as  an  annihilation  of  capital,  181 

Its  promised  benefits  would  not  long  continue 181 

111  seasons  of  difficulty  its  idle  hoards  would  be  used 182 

The  bank  of  deposit  would  thus  become  a  bank  of  circulation,  182 


CHAPTER  XIV. 

CONSUMPTION. 

Consumption  is  the  end  of  production 184 

Illustrated  by  a  loaf  of  bread,  &c 181 

The  whole  amount  produced  is  consumed  with  small  exception,  185 
Consumption  divided  between  individuals  and  the  government,  185 

How  the  power  in  free  governments  is  distributed 186 

The  public  revenue  chiefly  derived  from  taxation 187 

Taxes  ought  to  conform  to  four  maxims 187 

They  are  sometimes  levied  for  other  purposes  than  revenue....    188 


XV111  CONTEXTS. 

To  prevent  nuisances 188 

To  encourage  manufactures 188 

Land  tax  —  how  it  should  be  regulated 189 

Tax  on  houses 190 

Tax  on  imports — its  recommendations 190 

Excise  on  distilled  spirits 192 

Objections  made  to  it  in  Pennsylvania 192 

Stamps  —  objection  that  they  tax  the  time  as  well  as  the  purse,  193 

Tax  on  banks  —  a  compensation  for  the  privilege  granted  them,  193 

Tax  on  auctions 194 

Capitation  taxes 194 

Direct  and  indirect  taxes  compared 195 

Indirect  greatly  preferable 196 

Tax  on  estates  of  deceased  persons 197 


CHAPTER    XVI. 

PUBLIC   DEBTS. 

A  resource  in  great  national  emergencies 199 

Sometimes  they  arise  from  public  dues  to  individuals 199 

Hence  arose  the  practice  of  funding  a  debt 200 

Sometimes  they  arise  from  contracts  with  foreign  nations 200 

The  money  can  be  obtained  more  easily,  and  is  that  which  can 

be  best  spared 200 

In  lightening  the  present  burdens,  it  increases  the  future 201 

The  annual  interest  may  in  time  suffice  to  pay  the  expense  of 

the  Government 201 

They  seldom  fail  to  increase 201 

The  loss  incurred  not  so  great  as  it  at  first  seems 201 

"Much  spent  by  armies  would  have  been  as  unproductively 

spent 201 

Difference  between  a  debt  by  individuals  and  the  Government,  202 

Relief  from  public  debts  sought  in  different  ways 203 

Depreciation  of  the  coin 203 

Repudiation 203 


CONTEXTS.  XIX 

CHAPTER  XVII. 

THE   PUBLIC  EXPENDITURE. 

For  the  national  defence 205 

Effect  of  improvements  in  the  art  of  war 205 

Jails  and  penitentiaries 206 

Some  establishments  supported  by  the  State  Governments,  &c.  206 

Religion  —  free  in  the  United  States 206 

This  freedom  sanctioned  both  by  justice  and  policy 206 

Objections  to  it  answered 207 

It  probably  multiplies  sects 209 

Question  as  to  the  Mormons 210 

CHAPTER    XVIII. 

EDUCATION. 

The  great  benefits  of  a  good  system  of  juvenile  instruction 212 

Three  classes  of  schools  —  their  several  purposes 214 

Female  instruction  considered 216 

Employments  suited  to  women 216 

The  periodical  press  —  its  agency  in  popular  instruction 218 

CHAPTER  XIX. 

PUBLIC    CHARITIES. 

Who  are  their  proper  objects "Zl\) 

The  system  of  poor  laws  considered 220 

The  influence  of  education  in  lessening  the  number  of  poor...  223 

CHAPTER  XX. 

ROADS    AND    CANALS. 

The  advantages  of  facility  of  transport 224 

The  best  system  of  supporting  canals  and  railroads 225 

Benefit  of  railroads ..226 


POLITICAL  ECONOMY 

FOR 

THE    PEOPLE. 
CHAPTER  I. 

PHYSICAL   CAUSES   OF  NATIONAL  WEALTH. 

WHEN  we  survey  the  nations  of  the  earth,  we  per 
ceive  a  great  diversity  among  them  as  to  refinement 
and  civilization  ;  and  if  we  further  consult  the  annals 
of  these  communities,  we  find  that  while  some  have 
gradually  advanced  from  rudeness  to  refinement,  as 
England,  France,  and  Germany,  others,  which  once 
held  an  elevated  moral  position,  have  descended  low 
in  the  scale  of  civilization,  as  we  see  in  Egypt,  many 
of  the  nations  of  Asia  Minor,  and  some  of  those  of 
Ancient  Greece. 

The  last-mentioned  changes  show  that  the  condi 
tion  of  political  communities  is  dependent,  not  wholly 
on  physical  causes,  which  are  in  the  main  permanent, 
but  partly  also  on  moral  causes,  or  man's  own  efforts, 
which  vary  greatly  in  efficiency  and  degree. 

The  physical  causes  of  a  nation's  wealth  and  pros- 

(21) 


22  P  0  L  I  T  I  C  A  L    E  C  0  X  0  M  T. 

perity  are  principally  the  four  following :    Fertility 
of  soil,  its  climate,  its  mines,  and  its  waters. 

I.  Fertility. — Soils  differ  very  greatly  in  their  power 
of  producing  articles  useful  to  man,  especially  those 
which  are  fit  for  his  subsistence — so  that  while  some 
may  annually  return  to  the  husbandman  from  twenty 
to  a  hundred  times  the  seed  he  has  sown,  others  may 
be  utterly  barren.  Their  fertility  is  mainly  owing  to 
the  quantity  of  organic  matter  which  they  severally 
contain,  and  which  once  constituted  portions  of  the 
living  animals  and  vegetables  they  formerly  supported. 
It  also  in  part  depends  on  the  chemical  properties  of 
such  portions  of  the  earths  and  stones  of  which  the 
soil  is  composed,  and  which,  when  reduced  into 
small  particles  by  the  action  of  the  elements,  enter 
into  the  composition  of  different  vegetable  products. 

This  productive  power  of  soils  is  capable  of  being 
greatly  increased  by  human  industry,  partly  by  modes 
of  culture,  and  partly  by  the  addition  of  animal  and 
vegetable  manures,  and  of  certain  mineral  stimulants 
of  vegetable  production,  as  lime,  gypsum,  and  marl. 

II.  Climate. — The  power  of  a  country  to  support 
animal  life  is  greatly  influenced  by  its  climate.  In 
general,  its  productiveness  is  in  proportion  to  the 
quantity  of  solar  heat  it  receives,  so  that  the  nearer 
a  country  is  to  the  Equator,  the  greater  is  its  vege 
table  product.  Of  the  cereal,  or  grain  crops,  while, 
in  the  Temperate  Zones,  there  is  only  one  in  the  year, 
there  are  often  two  in  the  Torrid  Zone.  I  was  once 


PHYSICAL    CAUSES   OF    NATIONAL    WEALTH.  23 

shown  an  acre  in  the  Island  of  Antigua,  which  had 
produced  eight  hogsheads  of  sugar,  equal  to  8000 
pounds,  each  pound  requiring  a  gallon  of  the  juice  of 
the  cane.  There  are  also  many  vegetable  products, 
highly  prized  by  mankind,  which  can  be  produced 
only  in  wrarm  climates.  Of  this  description  are  sugar, 
coffee,  tea,  indigo,  and  many  woods  and  gums.  The 
orange,  the  fig,  the  peach,  and  the  olive,  do  not  thrive 
in  high  latitudes. 

In  the  Arctic  regions,  the  vegetable  products  are 
comparatively  few  and  of  slow  growth.  Fortunately, 
most  of  the  cerealia,  or  grain-bearing  plants,  grow  in 
the  widest  range  of  climates  —  from  the  Equator  to 
60°  of  North  or  South  Latitude. 

The  heat  of  countries,  though  principally  deter 
mined  by  their  position  on  the  globe,  is  also  affected 
by  two  other  circumstances,  which  it  is  proper  to 
notice. 

The  first  of  these  is  the  elevation  of  the  region 
above  the  average  level  of  the  earth.  In  consequence 
of  the  perennial  heat  in  the  interior  of  our  globe,  it  is 
found  that  the  temperature  diminishes  as  we  ascend, 
at  about  the  rate  of  one  degree  of  Fahrenheit's  scale 
for  every  110  yards  of  ascent,  so  that  regions  of  great 
elevation  are  as  cold,  and  consequently  as  unfavorable 
to  vegetable  production,  as  lower  regions  much  nearer 
to  the  Pole.  This  effect  of  elevation  is  not  uniform 
in  the  different  zones  of  the  earth. 

The  other  anomaly  of  climate  is  the  difference  be- 


24  POLITICAL     ECONOMY. 

tween  the  eastern  and  western  coasts  of  continents — 
it  being  found  that  the  eastern  are  both  warmer  in 
summer,  and  colder  in  winter,  than  the  western. 
This  fact  is  the  result  of  a  local  predominance  of  the 
westerly  wind,  and  the  difference  of  temperature  on 
the  land  and  the  ocean,  both  in  summer  and  winter. 
It  is  found  that,  in  the  Temperate  Zones,  there  is 
about  three  times  as  much  wind  from  the  wrest  as  the 
east,  in  consequence  of  which,  the  prevailing  west 
wind  on  the  western  coasts  of  continents  has  blown 
over  the  ocean,  and  partakes  of  its  equable  tempera 
ture,  both  in  summer  and  winter  —  while  the  same 
excess  of  west  wind,  on  the  eastern  coasts,  has  blown 
over  land,  and  is  consequently  colder  in  winter  and 
hotter  in  summer.  Hence,  the  climates  of  Western 
Europe  are  10°  or  11°  warmer  in  winter  than  on  the 
Atlantic  coast  of  America  in  the  same  latitude,  while 
those  on  the  Pacific  coast  are  similar  to  those  of 
Europe. 

III.  Mines. — The  wealth  and  prosperity  of  a  State 
are  greatly  affected  by  its  minerals ;  the  most  import 
ant  of  which  are  coal,  iron,  copper,  lead,  salt,  gold, 
and  silver ;  each  one  answering  its  own  useful  pur 
pose.  England  probably  owes  her  extraordinary 
wealth  and  industry  of  population  more  to  the  abun 
dance  of  her  coal  and  iron  than  to  any  one  single 
circumstance  whatever.  Salt  seems  to  be  indispen 
sable  to  animal  life,  and  must  be  brought  at  a  great 
expense  into  countries  which  do  not  produce  it. 


PHYSICAL    CAUSES   OF    NATIONAL   WEALTH.  25 

Without  the  use  of  iron,  the  industry  of  man  would 
be  comparatively  unavailing.  It  is,  however,  so  ex 
tensively  used,  that  its  transportation  from  other 
countries  would  be  very  costly.  The  direct  addition 
to  the  national  wealth  in  the  United  States  from 
their  minerals,  according  to  the  census  of  1840  and 
1850,  is  only  about  four  per  cent.  It  will  probably 
be  doubled  at  the  next  census,  principally  by  means 
of  the  gold  of  California.  But  this  does  not  indicate 
the  whole  of  their  benefit,  as,  in  the  character  of  raw 
materials,  they  give  a  stimulus  and  encouragement 
to  all  the  other  branches  of  industry. 

IY.  Waters.  —  These,  also,  are  very  conducive  to 
the  welfare  of  States.  Countries  bounded  by  the 
ocean  are  able  to  draw  from  thence  large  supplies  of 
wholesome  and  palatable  food,  the  surplus  of  which 
they  can  readily  exchange,  by  means  of  commerce, 
for  such  articles  as  their  own  country  does  not  afford. 
Countries  remote  from  the  sea-coast  may  commonly 
obtain  similar  supplies  from  rivers  and  lakes. 

The  waters  of  a  country  also  afford  easy  means  of 
transportation,  both  of  men  and  commodities ;  which 
is  of  so  much  importance,  that  hitherto  there  has 
been  no  large  city  in  the  world,  and  scarcely  any 
second-rate  one-,  which  was  not  situated  on  the  water, 
so  that  it  could  derive  from  a  distance  a  part  of  its 
supplies  by  means  of  this  cheap  mode  of  transporta 
tion.  It  remains  to  be  seen  whether  the  new  agent, 
3 


26  POLITICAL    ECONOMY. 

steam,  can  furnish  the  like  supplies  with  adequate 
cheapness. 

The  rivers  of  a  country,  and  sometimes  its  lakes 
also,  afford  a  cheap  motive  power  for  every  species 
of  mills,  and  for  various  kinds  of  manufacturing 
machinery. 


CHAPTER  II. 

MORAL  CAUSES   OF   NATIONAL  WEALTH. 

THESE  causes  are  principally  four — industry,  skill, 
frugality,  and  good  government;  which  we  will 
briefly  notice. 

1.  Industry.  —  Whatever  may  be  the  bounty  of 
Nature,  her  gifts  must  be  improved  by  man's  own 
efforts,  to  make  that  bounty  available;  and  where 
they  are  earnest  and  well  directed,  he  is  amply  com 
pensated  for  his  toil.  It  is  by  means  of  his  industry 
that  he  obtains  food,  clothes,  houses,  furniture,  and 
utensils  in  countless  number,  to  aid  him  in  his  opera 
tions  on  matter. 

His  industry  is  principally  employed,  first,  in  pro 
ducing  such  raw  materials  as  can  be  rendered  con 
ducive  to  his  comfort  or  gratification ;  next,  in  chang 
ing  the  forms  of  those  raw  materials  so  as  to  make 
them  subservient  to  his  various  purposes ;  and  lastly, 
in  transferring  either  the  raw  materials  or  the  fabrics 
made  of  them  from  one  place,  where  they  are  com 
paratively  abundant  and  cheap,  to  another,  where 
they  are  more  scarce  and  dear.  The  first  species  of 
industry  is  chiefly  agricultural,  but  is  also,  in  part, 

(27) 


28  POLITICAL     ECONOMY. 

that  of  mining  and  of  fishing.  The  second  is  manu 
facturing,  and  the  third  is  commercial  industry. 

These  different  species  of  labor  are  the  main  con 
stituents  of  the  material  wealth  of  communities. 

II.  Sldll  or  knowledge.  —  The  exercise  of  man's 
intellectual  faculties  is  obviously  indispensable  to 
the  success  of  all  his  bodily  exertions ;  but  we  mean 
to  speak  here  of  those  powers  of  invention  and  rea 
soning  which  are  above  those  possessed  by  the  gene 
rality  of  mankind.  By  means  of  such  mental  supe 
riority,  man  has  made  himself  acquainted  with  the 
properties  and  laws  of  matter,  and  has  thus  rendered 
it  subservient  to  his  wants  and  purposes.  In  this  way 
he  has  been  able  to  find  the  materials  of  clothing  at 
once  soft,  light,  and  warm,  from  the  wool  or  hair  of 
animals,  from  the  fibres  of  certain  plants,  and  even 
from  the  tiny  web  of  the  worm ;  to  all  of  which  he 
has  imparted  the  most  brilliant  and  lasting  tints. 

From  the  earth  he  has  extracted  ores,  which,  by  a 
long  course  of  patient  ingenuity,  he  has  converted 
into  metals  to  assist  him  in  his  labors,  and  to  add  to 
the  comforts  and  embellishments  of  life.  From  the 
same  source,  and  by  similar  means,  he  has  obtained 
glass  and  porcelain,  stone,  brick,  and  marble,  which 
he  has  converted  into  houses  for  his  comfort,  churches 
for  the  worship  of  his  Maker  and  Preserver,  and 
theatres  for  his  amusement.  By  his  science  and  art, 
he  has  been  enabled  to  traverse  the  boisterous  and 
pathless  ocean,  and  to  visit  the  most  distant  regions 


MORAL   CAUSES   OF   NATIONAL   WEALTH.  29 

of  the  globe ;  but  more  than  all,  he  has  devised  a 
system  of  visible  signs  for  the  sounds  of  his  voice,  by 
which  he  can  make  an  enduring  record  of  his 
thoughts  and  feelings,  and  thus  transmit  to  all 
regions,  and  to  future  generations,  the  useful  disco 
veries  which  genius  or  fortunate  accident  may  have 
brought  to  light.  But  the  achievements  of  his  men 
tal  powers  may  be  best  seen  by  looking  at  such 
results  as  a  book,  a  steamship,  a  telescope,  a  micro 
scope,  a  railway,  a  gun,  or  a  telegraph. 

In  addition  to  those  triumphs  of  intellect  which 
benefit  the  whole  human  species,  we  often  see  in 
stances  of  skill  which  are  confined  to  particular 
countries  and  districts.  In  this  way  Sheffield  is  dis 
tinguished  for  its  cutlery,  Birmingham  for  its  hard 
ware,  Manchester  for  its  cotton  fabrics,  Lyons  for  its 
silks,  Sevres  for  its  porcelain,  and  the  Gobelin  manu 
factory  for  its  tapestry.  So,  also,  Cremona  once  made 
the  best  violins,  and  Damascus  and  Toledo  the  best 
swords.  Japan  is  still  famous  for  its  lacquered  ware, 
and  China  for  its  gongs.  Superior  knowledge  or  art 
are  thus,  whether  upon  a  small  or  a  great  scale,  a 
source  of  wealth  and  power  to  their  possessors. 

III.  Frugality.  —  If  some  portion  of  the  products 
of  industry  be  not  put  away  to  aid  man  in  his  future 
creative  operations,  a  nation  could  make  no  progress 
in  wealth.  It  could  never  acquire  capital,  wrhich,  as 
we  shall  see,  is  indispensable  to  further  production. 
Without  this  aid,  creative  industry  can  no  more  exist 
3* 


30  POLITICAL    ECONOMY. 

than  man  can  live  without  food.  The  extraordinary 
opulence  of  Holland,  which  once  carried  on  commerce 
with  all  the  world,  and  which  even  now  lends  money 
to  most  of  its  neighbors,  was  owing  no  less  to  the 
economy  than  the  industry  of  its  inhabitants. 

One  cause  of  wealth  which  has  ever  characterized 
commercial  nations,  is  the  fact  that  they  neither  could 
have  acquired  the  materials  of  traffic,  nor  have  ex 
tensively  prosecuted  it  without  great  forbearance  to 
spend.  It  is  obviously  as  true  with  a  nation  as  with 
an  individual  —  if  it  annually  consumes  all  that  it 
annually  produces,  it  at  best  can  be  but  stationary, 
and  may  be  easily  retrograde. 

IV.  Government.  —  For  a  nation  to  be  at  once  safe, 
prosperous,  and  happy,  it  must  have  the  advantage 
of  good  government  and  laws.  Man  will  be  neither 
industrious  nor  frugal,  if  a  rapacious  government  is 
ready  to  seize  on  the  fruits  of  his  labor.  His  pro 
ductive  powers  are  not  likely  to  be  much  exerted,  if 
his  earnings  are  not  secured  to  him,  and  placed  be 
yond  the  reach  of  arbitrary  power;  and  the  spectacle 
of  great  national  industry,  either  agricultural,  manu 
facturing,  or  commercial,  has  never  been  seen  under 
a  pure  despotism. 

It  is  not  only  necessary  that  productive  industry 
should  be  protected  from  the  exactions  of  its  own 
government,  but  also  from  the  invasive  violence  of 
other  nations.  It  must  also  be  defended  from  the 
attacks  of  domestic  force  or  fraud,  and  these  defences 


MORAL    CAUSES   OF    NATIONAL    WEALTH.  31 

cannot  be  furnished  without  an  efficient  government, 
and  a  good  system  of  jurisprudence. 

The  rights  of  property  and  of  person  should  be 
accurately  defined,  and  promptly  and  vigorously 
maintained.  Contracts,  freely  and  fairly  made,  should 
be  strictly  enforced — and,  above  all,  the  Government 
should  honorably  fulfil  its  own  engagements,  whether 
they  were  to  pay  a  debt,  to  relieve  from  a  burden,  or 
to  concede  a  privilege.  Nothing  better  shows  the 
wise  policy  of  honesty  than  a  scrupulous  preservation 
of  the  public  faith.  By  a  breach  of  it,  a  nation  may 
lose  more  than  it  gains,  even  in  a  pecuniary  view; 
but,  for  its  loss  of  character,  it  can  have  no  adequate 
compensation. 

The  modes  in  which  a  government  may  impede  a 
nation's  prosperity  and  wealth,  are  truly  formidable 
in  number  and  degree.  It  may  subject  its  people  to 
a  merciless  system  of  taxation,  as  in  India,  under  its 
former  Rajahs  and  its  present  rulers.  It  may,  like 
Charles  the  Twelfth,  drag  them  from  the  plough  or 
the  loom,  to  shed  their  blood  to  gratify  his  mad 
ambition.  Or  it  may  employ  them  in  building  vast 
pyramids,  as  in  Egypt ;  or  fantastic  palaces,  like  the 
Alhambra  in  Spain,  or  Versailles  in  France.  Or  it 
may  grant  monopolies  of  all  articles  in  most  general 
use  to  a  few  pampered  court  favorites.  Such  are 
among  the  modes  by  which  mankind  have  been  down 
trodden  and  oppressed  by  their  rulers. 


32  POLITICAL     ECONOMY. 

But  governments  sometimes  err  by  a  well-intended 
but  vicious  intermeddling ;  for  in  the  body  politic,  too 
much  regulation  is  as  mischievous  as  too  much  medi 
cine  in  the  body  natural.  It  was  a  conviction  of  this 
truth  which  suggested  to  the  merchants  of  France 
their  celebrated  answer  of  "laissez  nous  faire" — let 
us  alone — to  Colbert,  who  had  inquired  how  he  could 
serve  them.  With  an  intelligent  people,  the  sagacity 
of  individuals  will  suggest  far  better  schemes  for  their 
interest  than  any  sovereign  or  legislature  is  likely  to 
do ;  and,  in  the  estimation  of  a  free  people,  the  forbear 
ance  of  a  government  is  one  of  its  highest  attributes. 


CHAPTER   III. 

PRINCIPLES    OF  VALUE. 

IN  laying  down  the  following  principles,  I  have, 
in  most  instances,  conformed  to  the  most  approved 
theories  of  value ;  carefully  avoiding,  however,  those 
subtle  questions  to  which  speculations  on  the  subject 
have  sometimes  given  rise. 

1.  Value,  in  its  largest  sense,  is  that  emotion  of 
complacency  by  which  we  regard  any  of  our  qualities 
or  possessions  that,  in  any  way,  may  minister  to  our 
gratification ;  as  health,  accomplishments  of  body  or 
mind,  the  affection  or  esteem  of  others,  land,  money, 
or  goods.     The  most  precious  of  these  are  not  trans 
ferable  ;  and  while  the  different  values  set  on  those 
priceless  gifts  by  different  persons,  and  yet  more  the 
difference  in  the   modes  of  exhibiting  them,  cause 
great  diversities  of  moral  character,  they  are  not  at 
all  regarded  by  the  political  economist.     His  specu 
lations  are  limited  to  such  objects  of  value  as  can 
pass  from  individual  to  individual,  and  which  thus 
constitute  the  materials  of  exchange. 

2.  The  practice  of  exchanging  commodities  is  so 
universal,   and  of  such  frequent  recurrence   among 
men,  that  Adam  Smith  has  regarded  it  as  the  result 

C  (33) 


0-i  POLITIC  A  L     E  C  0  X  0  M  Y. 

of  a  peculiar  instinct;  but  it  seems  to  require  no  other 
explanation  than  a  reference  to  the  predominant  sway 
of  man's  self-love,  in  seeking  to  promote  his  interest, 
or  add  to  his  enjoyment,  by  exchanging  what  he 
values  less  for  what  he  values  more. 

In  civilized  life  these  exchanges  are  indispensable 
not  merely  to  man's  comfort,  but  even  to  his  subsist- 
once.  There,  nearly  all  that  he  eats,  drinks,  or 
wears,  is  procured  by  exchanges,  which  it  is  the  great 
use  of  money  to  facilitate ;  and,  great  as  is  its  agency 
in  this  way,  the  use  of  credit  —  that  is,  promises, 
written  or  oral,  to  pay  money  —  is  far  greater.  If 
we  look  into  the  various  occupations  of  men,  we  shall 
find  that  a  main  business  of  life  consists  either  in 
making  exchanges,  or  in  preparing  to  make  them. 
The  agriculturist,  by  one  set  of  exchanges,  sells  his 
raw  produce,  and,  by  another,  buys  comforts  and 
luxuries  for  himself  and  his  family.  The  manufac 
turer  buys  the  raw  material  he  requires,  together 
with  the  services  of  his  workmen,  and  sells  the  fabric 
he  has  wrought.  The  merchant  does  nothing  but 
buy  and  sell.  The  lawyer  or  physician  exchanges 
his  time  and  skill  for  money,  or  promises  to  pay  it. 
The  divine,  too,  exchanges  his  efforts  to  make  men 
better  and  wiser,  for  the  means  of  supporting  his 
household.  However  human  efforts  may  be  directed, 
they  terminate  in  exchanging  what  is  possessed  for 
what  is  more  desired. 

3.  In  all  exchanges,  whether  by  barter  (commodity 


PRINCIPLES    OF    VALUE.  35 

for  commodity),  or  by  sale  (commodity  for  money), 
each  party  obtains  as  much,  and  parts  with  as  little, 
as  he  can.  Each  one,  however,  obtains  more  value 
than  he  gives,  but  as  this  is  the  case  with  both  par 
ties,  the  articles  exchanged  may  commonly  be  con 
sidered  as  equivalents. 

4.  No  solitary  exchange  affords  certain  evidence 
of  the  precise  value  of  the  articles  exchanged,  even 
in  the  estimation  of  the  parties,  as  the  buyer  might 
have  given  more  and  the  seller  have  taken  less,  if 
necessary  to  the  bargain.     Thus,  a  horse  is  sold  for 
one  hundred  dollars,  but  the  seller  might  have  taken 
ninety  dollars  rather  than  have  missed  the  sale ;  and 
the  buyer  might  have  given  an  hundred  and  ten 
dollars,  or  more,  rather  than  not  have  made  the  pur 
chase.     But  where  there  is  a  free  competition  among 
both  sellers  and  buyers,  as  is  the  case  with  articles 
extensively  consumed,  the  conflicting  efforts  of  the 
parties   settle  down  on  what   is  called  the   market 
price. 

5.  For  an  article  to  have  a  value  that  may  be  ex 
changed  for  another  value  — -  called,  hence,  its  value 
in  exchange,  or  exchangeable  value — it  must  have  desi 
rableness,  and  be  acquired  with  some  difficulty,  that 
is,  at  some  cost  of  labor  or  privation.     If  the  latter 
element  be  wanting,  the  article,  whatever  may  be  its 
utility,  has  no  exchangeable  value  or  price  in  the 
market,     Thus  air,  light,  and  water  are  indispensable 
to  men's  comfort,  and  two  of  them  even  to  his  vital 


36  POLITICAL    ECONOMY. 

existence ;  yet,  from  the  abundance  with  which  they 
have  been  furnished  by  nature,  they  generally  have 
no  exchangeable  value.  Let,  however,  the  supply 
of  these  natural  bounties  be  intercepted,  and  imme 
diately  their  natural  value  gives  them  value  in  ex 
change.  Thus,  water,  which  in  some  of  the  West 
Indies  is  supplied  wholly  by  rain,  and  is  kept  in  cis 
terns  or  tanks,  becomes,  in  times  of  long  drought,  an 
article  of  traffic,  so  that  a  hogshead  of  rum  has  been 
exchanged  for  a  hogshead  of  water.  Even  in  New 
York,  before  the  Croton  aqueduct,  water,  of  a  purer 
quality  than  was  furnished  by  the  neighboring  springs 
was  regularly  sold.  So,  too,  light,  which,  during  the 
day,  is  furnished  gratuitously  by  nature,  has  immense 
exchangeable  value  in  the  night,  as  is  evinced  by  the 
sums  expended  for  gas,  lamps,  oil,  and  candles.  Even 
in  the  day,  much  is  spent  for  the  same  object,  in  glass 
windows,  and  in  lighting  cellars  and  dark  passages. 
Air,  also,  which  is  so  abundant  as  to  fill  all  space  on 
our  globe,  may,  under  peculiar  circumstances,  have 
great  exchangeable  value ;  and  there  was  no  one  of 
the  Englishmen  suffocated  in  the  Black  Hole  of  Cal 
cutta,  who  would  not  have  gladly  given  his  estate 
for  a  few  gallons  of  pure  air.  The  same  fact  is  mani 
fested  by  the  money  which  is  occasionally  expended 
for  the  ventilation  required  by  our  mansions  and 
public  edifices. 

In  like  manner,  heat,  which  is  essential  to  human 
comfort,    and   which   is   gratuitously  and   profusely 


PRINCIPLES    OF    VALUE.  37 

supplied  to  the  inhabitants  of  the  Torrid  Zone,  is 
purchased  in  the  other  regions  of  the  earth  at  an 
enormous  expense  in  fuel,  warm  clothing,  and  the 
construction  of  our  buildings,  public  and  private. 

6.  The  difficulty  of  obtaining  an  article,  which  we 
have  seen  to  be  one  of  its  elements  of  exchangeable 
value,  is  of  two  kinds  :  one  consists  in  the  labor,  skill, 
and  capital  expended  in  its  production ;  the  other,  in 
its  relative  scarcity.     In  the  first  case,  the  value  de 
pends  upon  the  cost  of  producing  it ;  and,  supposing 
the  labor  and  skill  expended  to  be  those  of  ordinary 
men,  commodities  will  have  value  according  to  the 
time  or  labor  required  for  their  production.     Thus, 
an  article  which  it  has  cost  one  day  to  produce,  will 
exchange  for  another  produced  in  the   same  time. 
If  it  take  as  long  to  make  a  pair  of  shoes  as  a  hat, 
supposing  the  materials  to  be  of  equal  value,  so  will 
be  the  value  of  the  hat  and  the  shoes.     Supposing  it 
costs  twice  as  much  labor  to  produce  a  bushel  of 
wheat  as  a  bushel  of  corn,  a  bushel  of  the  former  will 
be  worth  two  bushels  of  the  latter. 

7.  In  commodities,  the  value  of  which  arises  from 
the  scarcity,  that  value  is  determined  by  the  offers 
of  rival   competitors.     Of  this  character  are  those 
articles  which  cannot,  like  those  of  the  first  class,  be 
indefinitely  multiplied,  or,  perchance,  be  increased  at 
all,  as  paintings  by  old  masters,  antique  sculptures, 
coins,  medals,  or  manuscripts ;   and  so,  of  any  other 
rare  product  of  art  or  nature. 

4 


38  POLITICAL    ECONOMY. 

8.  Of  such  articles,  the  owner  has  the  monopoly, 
or  sole  right  of  sale,  "which  is  more  or  less  exclusive, 
according   to   the    scarcity.      Monopolies  of  articles 
liberally  consumed,  and  susceptible  of  an  abundant 
production,  are  sometimes  granted  by  arbitrary  govern 
ments,  and  sometimes  they  may  be,  in  any  country, 
the  result  of  fortunate  accident.    The  exclusive  rights 
which  are,  for  a  time,  conferred  on  authors  and  in 
ventors,  are  monopolies  created  by  law.     In  all  these 
cases,  the  monopolist  having  the  power  of  fixing  his 
own  price,  and  knowing  that  the  extent  of  his  sales 
will  be  inversely  as  the  price,  will  choose  between  the 
alternatives  of  selling  a  less  quantity  at  a  high  price, 
or  a  large  quantity  at  a  low  price.     The  demand  he 
has  no  means  of  influencing  except  by  the  price. 

9 .  In  both  classes  of  commodities,  whatever  may  be 
the  price  at  any  one  time  or  place,  that  price  is  liable 
to  fluctuation  by  reason  of  an  alteration  in  the  supply 
or  the  demand,  that  is  to  say,  in  the  relation  between 
them ;  for  if  the  same  alterations  take  place  both  in 
the  supply  and  the  demand,  whether  by  increase  or 
diminution,  then  the  price  will  not -be  affected. 

10.  By  the  supply  of  a  commodity  is  meant,  not 
the  whole  quantity  of  it  in  the  community,  but  only 
that  portion  which  is  offered  for  sale  in  the  market, 
or  ready  to  be  so  offered :  such  are  the  shoes  in  the 
shops  of  the  shoemakers  and  others;  the  hats  and 
other  fabrics  in  the  appropriate  places  of  sale ;   the 


PRINCIPLES     OF    VALUE.  39 

provisions  of  different  kinds  in  the   stores  of  their 
respective  dealers. 

11.  By  the  demand  of  a  commodity  is  meant  the 
desire  to  possess  it,  combined  with  the  means  of  pur 
chasing  it,  to  which  may  be  added  the  will  to  use  the 
means.     The  desire  of  a  poor  man  for  a  costly  luxury 
has  no  influence  on  its  price,  and  the  desire  of  a  rich 
miser  may  be  as  unavailing  as  that  of  a  beggar. 

12.  Every  addition  to  the   supply — the  demand 
continuing  the  same — tends  to  lower  the  price,  since 
it  is  only  by  a  reduction  of  price  that  the  additional 
quantity  can  be  generally  sold.   A  diminished  demand, 
producing  the  same  relative  change  as  an  increased 
supply,  has  the  same  lowering  effect. 

13.  A  diminished  supply,  on  the  other  hand,  or  an 
increased  demand,  tends  to  raise  the  price,  since  it  is 
only  by  giving  a  higher  price  that  the  quantity  desired 
can  be  certainly  obtained.     The  rise  of  price  is  some 
times  the  effect  of  competition  among  the  buyers,  and 
sometimes  the  result  of  the  sagacity  of  the  sellers, 
who  raise  the  price  in  anticipation  of  the  increased 
competition  of  the  buyers. 

14.  It  must  not,  however,  be  supposed,  as  some 
times  has  been  done,  that  a  change  in  the  supply  or 
demand  of  an  article  produces  a  proportional  change 
of  price.     The  alteration  of  the  price  is  always  in  a 
less  ratio  than  that  of  the  supply  or  demand.     Thus, 
let  it  be  assumed  that  the  supply  of  a  commodity  has 
been  doubled,  the  demand   being  unchanged  —  the 


40  POLITICAL    ECONOMY. 

natural  consequence  of  this  addition  to  the  supply  is 
a  fall  of  price ;  but  the  consequence  as  natural  and 
certain  of  such  fall  of  price  is  an  increased  demand 
for  the  commodity,  which,  we  have  seen,  tends  to 
raise  the  price ;  so  that  before  the  price  has  Mien  to 
one-half,  which  would  be  in  proportion  to  the  double 
supply,  the  demand  and  supply  are  equal,  and  the 
price  is,  of  course,  stationary.  In  this  way  the  addi 
tion  to  the  supply  is  met  partly  by  a  reduction  of 
price,  and  partly  by  an  increased  demand.  Hence, 
the  great  increase  of  gold  and  silver,  consequent  on 
the  discovery  of  America,  and  which  was  estimated 
at  ten  times  their  previous  amount,  did  not  reduce 
the  value  of  those  metals  to  one-tenth,  but  only  to 
one-third  or  one-fourth  —  the  additional  supply  being 
counterbalanced  partly  by  the  fall  of  price,  and  partly 
by  the  increased  demand  *  for  those  metals,  in  conse 
quence  of  their  reduced  value. 

15.  In  like  manner,  a  diminished  supply,  by  rais 
ing  the  price,  lessens  the  demand,  and  to  that  extent 

*  M.  Say,  whose  views  on  political  economy  are  commonly 
clear  as  well  as  just,  has  fallen  into  a  singular  error  on  this  sub 
ject.  He  estimates  the  increased  demand  of  the  precious  metals 
at  twenty-five  times  the  amount  before  the  discovery  of  America. 
Had  this  been  the  case,  the  value  of  those  metals  must  have  been 
raised  instead  of  lowered  by  the  product  of  the  American  mines. 
Had  the  demand  been  only  ten  times  as  great  —  equal  to  the  in 
crease  of  the  supply — the  value  would  have  been  unchanged.  It 
gives  almost  as  much  surprise  that  so  palpable  an  error  should 
have  been  unnoticed,  both  by  the  English  translator  and  the 
American  editor  of  Say. 


PRINCIPLES     OF     VALUE.  41 

prevents  a  rise  of  price  equivalent  to  the  diminution 
of  the  supply. 

16.  It  thus  appears  that  every  alteration,  either 
in  the  demand  or  the  supply  of  a  commodity,  pro 
duces  not  only  a  change  of  price,  but  that,  by  reason 
of  this  change  of  price,  an  increase  or  diminution  of 
the  one  produces,  in  a  less  degree,  a  correspondent 
increase  or  diminution  of  the  other. 

17.  There  is,  in  every  community,  a  precise  and 
certain  demand  for  every  commodity,  —  comprehend 
ing  its  different  kinds,  —  according  to  the  desirable 
ness  of  each  article,  and  the  difficulty  of  obtaining 
it ;  which  difficulty  is  chiefly  its  price.    Thus,  in  the 
case  of  hats,  we  will  suppose,  by  way  of  illustration, 
the  demand  for  that  article  of  apparel  to  be  as  fol 
lows,  according  to  the  price  : 

For  hats  whose  price  was  five  dollars,  the  demand  to  be  1000. 
"  four  dollars,  "  "     2000. 

three  dollars,  "  "     6000. 

two  dollars,  "  "      10,000. 

"  "  one  dollar,  "  "      20,000. 

18.  This    may   be    called   the    natural   demand, 
founded  on  the  existing  tastes  and  means  of  the  com 
munity  ;    and  to  this  demand   the   makers  of  hats 
must  conform,  or  incur  a  loss ;  for  if  they  make  the 
supply  exceed  this  natural  demand,  as  if  they  were 
to  make  2000  hats  whose  cost  of  production  or  natu 
ral  price  was  five  dollars,  the  natural  demand  for 

which  was  only  1000,  they  could  not  sell  the  extra 
4  # 


42  POLITICAL     ECONOMY. 

thousand  without  a  reduction  of  price.  If,  on  the 
other  hand,  they  made  but  500  hats  of  that  quality, 
although  for  them  they  might  obtain  a  higher  price, 
the  profits  thus  obtained  would  be  less  than  would  be 
afforded  by  the  sale  of  a  thousand  hats  at  five  dollars, 
according  to  the  laws  of  value  previously  stated. 

19.  Value,  being  a  feeling  of  the  mind,  is  as  vari 
ous  as  the  diversified  and  ever-changing  wants  and 
tastes  of  men.     It  is  different  in  different  objects,  in 
the  same  object  at  different  times  and  places,  with 
different  individuals,  and  with  the  same  individual, 
on    different    occasions.      On   a   dreary  journey,    a 
draught  of  water  may  be  more  valuable  than  a  gal 
lon  of  wine. 

20.  As  value  can  be  known  only  by  its  manifesta 
tions  in  acts  of  exchange,  its  different  degrees  must 
be   estimated    by   comparing    the   values    thus   ex 
changed  ;  but  as  all  of  such  values  are  liable  to  alter 
ation,  there  cannot  be  that  uniform  measure  of  value 
which    is    afforded  to  portions  of  matter,  space,  or 
time.     Although,  therefore,  such  a  precise  and  un 
varying   standard   is    unattainable,    certain   objects, 
which,    under   particular   circumstances,    make   the 
nearest  approaches  to  uniformity,  have  been  selected 
as  qualified  measures  of  value. 

21.  Of  these  measures,  one  is  best  for  one  purpose 
and  another  for  another.     The  precious  metals,  so 
highly   and    so    universally   prized,    and    otherwise 
strongly  recommended,  afford  the  best  measure  for 


PRINCIPLES     OF     VALUE.  43 

the  same  time  and  place.  For  most  objects  of  ex 
changeable  value,  they  then  and  there  furnish,  for 
all  practical  purposes,  an  exact  measure.  Thus,  if 
an  ounce  of  silver  exchange  in  the  market  for  a 
bushel  of  wheat,  weighing  sixty  pounds,  and  also 
for  two  bushels  of  maize,  or  for  ten  pounds  of  beef, 
it  follows  that  one  bushel  of  wheat  is  equal  in  value 
to  two  bushels  of  maize,  and  one  pound  of  beef  to 
six  pounds  of  wheat.  But  these  metals  vary  greatly 
in  value  in  different  countries,  according  to  their 
respective  distances  from  the  most  productive  mines 
of  the  world.  They  are  thus  more  valuable  in  Asia 
than  in  Europe,  and  in  Europe  than  America.  Their 
value  has  varied  yet  more  in  different  ages  of  the 
world. 

22.  Labor,  which  regulates  the  value  of  so  many 
articles  useful  to  man,  has  also  been  deemed  a  fit 
measure  of  value  in  different   countries,  from   the 
similarity  of  mankind  in  their  ruling   propensities 
and  desires,  and  their  obedience  to  the  laws  of  their 
common  nature ;  yet  we  find  that  human  labor  is  far 
more  willing  and  efficient  in  the  Temperate  than  in 
either  the  Torrid  or   the  Frigid  Zones.     Its  value 
varies,  too,  from  moral  causes. 

23.  Corn,  some  species  of  which  constitute  a  chief 
article  of  subsistence  to  civilized  man,  and  which  is 
so  readily  converted  into  human  labor,  has  also  been 
regarded  as  a  fit  measure  of  value.     It  has,  however, 
no  more  uniformity  than  labor ;  and,  from  the  diver- 


44  POLITICAL     ECONOMY. 

sity  of  human  aliment,  has  a  less  extensive  applica 
tion.  Besides,  it  has  been  found  that,  in  the  pro 
gressive  increase  of  population,  corn  gradually 
increases  in  value,  from  its  greater  difficulty  of  at 
tainment;  and  that  labor  gradually  falls  in  value, 
from  its  greater  abundance,  as  will  be  hereafter  more 
fully  explained. 

24.  On  this  account,  a  combination  of  corn  and 
labor  has  been  suggested  as  affording  the  best  measure 
for  comparing  values  at  different  periods,  and  between 
countries  in  different  stages  of  advancement.     The 
plan  is  plausible  in  theory,  but  it  has  as  yet  furnished 
no  rules  of  practical  application. 

25.  But  notwithstanding  these  inherent  disadvan 
tages,  human  reason  has,  by  numerous  comparisons, 
been  able  to  deduce  the  values  of  objects,  at  any  time 
or  place,  in  their  countless  diversity,  with  an  approxi 
mation  to  the  truth  which  is  sufficient  for  any  purpose 
of  practical  utility,  or  the  gratification  of  a  liberal 
curiosity. 


CHAPTER  IV. 

THE   PROGRESS   OF   SOCIETY. 

SUCH  are  the  principles  of  exchangeable  value 
which  we  perceive  have  their  foundation  in  the 
innate  desires  and  propensities  of  man.  Let  us  now 
see  their  application  to  the  three  great  sources  of 
national  wealth :  the  RENT  OF  LAND,  the  WAGES  OF 
LABOR,  and  the  PROFITS  OF  CAPITAL  —  and  first  of 
RENT. 

In  the  infancy  of  society,  when  population  was 
thin,  land,  however  productive,  was,  from  its  abun 
dance,  like  air,  light,  or  water,  without  exchangeable 
value,  and  was  the  common  property  of  the  little 
tribe  or  community  which  chanced  to  occupy  it.  In 
the  progressive  increase  of  population,  according  to 
the  great  law  of  all  animated  nature,  it  ultimately 
became  private  property,  and,  from  its  increased  dif 
ficulty  of  attainment,  together  with  its  utility,  it 
acquired  exchangeable  value,  which  gradually  aug 
mented  until  it  yielded  a  rich  return  in  rent.  The 
sources  and  modes  of  this  gradual  advancement  in 
value  will  be  better  understood  by  attending  to  the  pro 
gress  of  society  in  its  different  stages  of  civilization. 

In  the  first  of  these  stages,  according  both  to 

(45) 


46  POLITICAL     ECONOMY. 

present  observation  and  the  annals  of  history,  men 
lived  in  very  small  communities,  which  were  banded 
together  more  by  the  social  instinct  than  by  the  force 
of  government  or  of  laws ;  and  their  sustenance  was 
derived  from  the  wild  game  of  the  forest,  or  its  spon 
taneous  fruits,  such  as  w^e  now  see  in  the  North 
American  Indians,  in  the  savage  inhabitants  of 
Southern  Africa,  of  Australia,  or  of  New  Zealand ; 
and  such  were  the  primitive  inhabitants  of  Gaul, 
Britain,  and  other  portions  of  the  old  world.  Though 
each  of  these  communities  may  have  had  its  peculi 
arities,  by  reason  of  a  diversity  of  physical  circum 
stances,  or  from  accidental  circumstances,  the  abo 
rigines  of  this  continent,  in  their  principal  features, 
may  be  considered  the  type  of  all  the  rest. 

The  sole  occupations  of  the  Indian  are  hunting  and 
war,  which  he  pursues  at  intervals  with  indefatigable 
ardor ;  but,  when  not  so  excited,  he  passes  his  time 
in  smoking,  or  in  listless  inactivity.  His  mental 
powers,  concentrated  on  few  objects,  are  little  deve 
loped,  but  the  qualities  of  his  heart  are  in  full  vigor. 
Sometimes  warm  in  his  attachments,  but  still  more 
implacable  in  his  resentments,  he  is  occasionally 
generous,  but  always  vindictive  and  cruel.  He  dis 
charges  the  rites  of  hospitality  wdth  scrupulous  exact- 
ness,  according  to  his  notions,  and  he  may  even 
instal  his  guest  into  the  place  of  the  relative  he  has 
lost.  He  commonly  shows  a  high  sense  of  justice  in 
his  little  dealings,  but  yet  more  by  enforcing  the  laws 


PROGRESS    OF    SOCIETY.  47 

of  retaliation  against  others,  and  even  by  submitting 
himself  in  turn  to  its  hardest  decrees.  He  exhibits 
great  courage  in  braving  danger,  and  yet  more  in 
enduring  pain  when  subjected  to  torture  by  his  ene 
mies  ;  but  when  tempted  by  pleasure,  he  is  incapable 
of  self-command.  He  is  thus  by  turns  a  hero,  a  sot, 
a  glutton,  and  sometimes  a  polygamist.  To  his  chil 
dren  he  is  over-indulgent ;  is  respectful  to  age ;  but 
the  women  he  treats  as  drudges  and  slaves,  to  which 
treatment,  however,  they  submit  rather  with  pride 
than  a  sense  of  degradation. 

Though,  in  this  stage  of  society,  no  individual  had 
an  exclusive  right  to  any  portion  of  the  soil,  except 
during  his  temporary  occupation  of  it,  yet  the  whole 
community  claimed  property  in  the  large  district 
which  constituted  their  hunting-ground,  and  which 
had  its  boundaries  assigned  by  rivers,  mountains,  and 
other  physical  marks.  These  claims  were  firmly 
maintained,  and  constituted  the  most  frequent  cause 
of  war  with  neighboring  tribes.  They  have  always 
been  recognized  by  the  United  States,  and  have  been 
the  foundation  of  many  a  treaty  of  cession  by  the 
Indians  for  large  pecuniary  considerations. 

In  this,  the  hunter  state,  the  means  of  subsistence 
being  wholly  or  principally  dependent  on  the  chase, 
are  very  precarious ;  and  there  are  probably  more  in 
stances  of  extreme  suffering  from  the  want  of  food 
among  the  sequestered  tribes  of  Indians  than  are  to 
be  found  in  the  densest  districts  of  China.  From  the 


48  POLITICAL    ECONOMY. 

precariousness  of  subsistence  among  these  tribes,  to 
gether  with  the  exterminating  character  of  their 
wars,  population  increases  slowly  with  them,  and, 
occasionally,  not  at  all.  The  same  circumstances, 
but  for  the  approach  of  the  white  race,  might  have 
postponed,  to  an  indefinite  period,  the  transition  of 
the  Indian  race  to  a  higher  stage  of  social  existence. 
The  density  of  population  of  hunter  tribes  is  com 
monly  rated  at  one  person  to  the  square  mile,  or  G40 
acres;  but  that  of  the  Indians  within  the  United 
States  has  been  more  nearly  one  to  1000  acres. 

Tribes,  in  this  stage  of  civilization,  living  on  the 
coast,  or  prolific  lakes  and  rivers,  sometimes  derive 
their  principal  subsistence  from  fish.  Such  tribes 
have  nearly  the  same  characteristics  as  those  who 
live  by  hunting,  except,  perhaps,  that  their  supplies 
of  food  are  less  precarious.  Here  began  the  noble 
art  of  navigation,  by  which  the  rude  canoe  has,  after 
a  thousand  improvements,  grown  to  the  floating  fort 
ress  of  one  hundred  guns,  the  magnificent  merchant 
ship,  and  lastly,  the  steamer  which  flies  over  the 
water  like  a  bird  through  the  air. 

The  Pastoral  state  is  generally  regarded  as  the 
second  stage  of  civilization.  It  probably  originated 
in  this  way :  when  the  population  of  a  hunter  tribe 
had  continued  to  increase,  notwithstanding  its  inhe 
rent  obstacles,  and  it  pressed  more  heavily  on  the 
means  of  subsistence,  the  sagacity  of  some  individual, 
or  other  fortunate  accident,  first  showed  the  practica- 


PROGRESS    OF     SOCIETY.  49 

bility  of  taming  and  domesticating  some  of  the  wild 
animals  of  the  forest,  by  which  man  would  provide 
for  himself  a  farther  supply  of  food.  The  first  in 
stance  would  soon  be  followed  by  others,  until  the 
practice  of  breeding  and  rearing  animals  whose  flesh, 
or  milk,  or  skins  afforded  him  sustenance  or  raiment, 
became  the  general  occupation  of  all.  In  this  way, 
the  means  of  subsistence  ceased  to  be  precarious,  and 
could  support  ten,  or  perhaps  twenty  times  as  many 
as  the  same  district  could  support  by  hunting. 

By  some  such  process,  man  won  from  their  original 
wildness  the  cow,  the  sheep,  the  goat,  the  hog ;  and 
of  birds,  that  most  useful  species  which  supplies  us 
with  eggs  and  chickens,  and  which,  from  its  excel 
lence,  is  called  "the  fowl,"  ducks,  and  geese,  to 
which  America  has  added  the  turkey,  furnishing  man 
with  food  equally  palatable  and  nourishing;  and,  to 
serve  other  useful  purposes,  the  camel,  the  horse,  the 
elephant,  and  the  dog,  which  prefers  the  society  of 
man  to  that  of  his  own  species,  and  which  remains 
faithful  to  him  when  deserted  by  all  other  friends. 

But  every  country  is  not  adapted  to  the  pastoral 
state.  Some  regions  are  not  naturally  productive  of 
grass,  or  not  in  sufficient  quantity ;  and  man,  in  his 
social  progress,  must  pass  from  the  hunter  state  to 
the  agricultural.  Such  must  have  been  the  destiny 
of  the  aborigines  of  North  America,  which  is  every 
where,  except  in  the  prairies  of  the  "West,  covered 
5  D 


50  POLITICAL    ECONOMY. 

with  a  dense  forest.  The  Indians  had  accordingly 
made  more  advances  towards  the  agricultural  than 
the  pastoral  state,  as  they  had  succeeded  in  taming 
no  bird  or  beast,  but  had  their  little  patches  of  to 
bacco,  maize,  and  cymlings.* 

The  nations  and  tribes  of  Western  Asia,  spoken 
of  in  the  five  books  of  Moses,  were  essentially  pas 
toral.  Abraham  is  mentioned  as  rich  in  "  cattle,  sil 
ver,  and  in  gold ;"  and  Lot,  his  rival  in  wealth  and 
power,  has  "  flocks,  and  herds,  and  tents ;"  and  when 
the  Egyptians  were  suffering  from  a  drought,  Joseph 
gave  them  bread  in  exchange  for  "  horses,  and  for  the 
flocks,  and  for  the  cattle  of  the  herds,  and  for  the 
asses."  So,  when  the  laws  against  the  invasion  of 
property  are  stated,  "  oxen,  asses,  and  sheep "  hold  a 
conspicuous  place. 

In  the  pastoral  state,  the  character  of  the  popula 
tion  undergoes  a  great  change.  From  being  warlike 
it  has  become  pacific,  though  not  unfit  for  war  in 
defence  of  its  rights,  and  sometimes  even  for  con 
quest.  With  manners  more  humane  and  civilized, 
the  mental  powers  are  also  farther  developed  by 
more  frequent  and  varied  exercise.  Men  now  had 
leisure  for  the  simpler  manufactures,  for  which  they 
had  new  materials  and  new  incentives ;  and  here, 
without  doubt,  wool  was  first  spun  and  woven.  Ex 
changes,  which  had  been  rare  in  the  hunter  state, 

*  The  "  squashes  »  of  the  Northern  States. 


PROGRESS     OF     SOCIETY.  51 

where  everything  is  consumed  as  soon  as  produced, 
naturally  increased  with  the  means.  By  the  greater 
facility  and  more  abundant  supply  of  subsistence 
thus  afforded,  population  gradually  grew  to  ten  or 
twenty  times  what  it  had  been  in  the  hunter  state. 

But,  soon  or  late,  the  members  of  a  community 
would  reach  the  level  first  of  easy,  then  of  difficult 
subsistence ;  wrhen  the  increased  demand  for  food 
would  stimulate  to  new  efforts  for  a  further  supply, 
which  could  be  furnished  only  by  agriculture.  The 
land,  indeed,  had  always  made  some  small  direct  con 
tribution  of  human  aliment,  but  the  quantity  could 
be  greatly  multiplied,  partly  by  breaking  up  and 
loosening  the  soil,  and  partly  by  ridding  it  of  all 
noxious  or  useless  plants,  and  limiting  its  products 
exclusively  to  those  articles  which  afford  sustenance 
to  man. 

Before  the  introduction  of  the  useful  arts,  and  es 
pecially  that  of  making  iron  for  axes,  spades,  ploughs, 
and  other  tools,  the  progress  of  agriculture  would  be 
slow1-.  Without  those  efficient  aids,  the  earth  could 
be  rid  of  its  trees  and  shrubs  only  by  the  imperfect 
process  of  fire,  and  be  turned  up  by  still  inferior  sub 
stitutes  for  iron.  But  after  a  community  had,  by 
means  of  its  own -invention,  or  the  exchanges  of  com 
merce,  acquired  the  use  of  this  metal,  population 
would  obtain  a  new  spring,  and  be  gradually  so  aug 
mented,  that  the  square  mile  which  had  once  afforded 


52  POLITICAL    ECONOMY. 

precarious  subsistence  to  a  single  savage  might,  under 
favorable  circumstances,  afford  an  easier  and  better 
one  to  two  or  three  hundred,  or  even  more ;  for  the 
highest  degree  of  density  of  numbers  which  the  soil 
can  support  has  never  yet  been  reached.  The  grow 
ing  value  of  land,  and  of  its  annual  returns,  in  this 
third  and  last  stage  of  society,  we  will  now  proceed 
to  consider. 


M  J!  K  A  If  V 

r  vi  v  i;  us  IT  v  <>K 

1 
CALIFORNIA. 


CHAPTER  V. 

RENT. 

LAND,  which  had  probably  become  private  property 
in  the  pastoral  state,  would  certainly  become  so  in 
the  agricultural  state.  As  every  material  thing, 
useful  to  man,  is  directly  or  indirectly  derived  from 
the  soil,  it  always  possessed  the  first  element  of  ex 
changeable  value,  and,  as  soon  as,  by  the  progress  of 
population,  it  had  relative  scarcity,  or  even  in  antici 
pation  of  it,  it  would  also  have  the  second  element, 
and  be  appropriated  by  those  who  chanced  to  possess 
power  or  influence.  When  once  its  ownership  in 
perpetuity  had  a  value  in  exchange  or  price,  so  also 
must  its  ownership  for  a  year,  when  its  most  valuable 
products  are  regularly  renewed.  This  is  the  origin 
of  RENT,  which  is  the  necessary  consequence  of  the 
utility  and  relative  scarcity  of  land. 

In  amount,  the  rent  of  land  is  the  excess  of  its 
products  beyond  the  labor  and  capital  expended  in 
its  cultivation,  according  to  the  existing  rates  of  re 
muneration.  Such  will  be  the  clear  profit  of  the  pro 
prietor,  if  he  himself  be  the  cultivator;  or,  supposing 
such  excess  to  accord  with  the  average  product,  in 
good  and  bad  seasons,  it  would  be  the  measure  of  the 
5*  (53) 


54  POLITICAL    ECONOMY. 

rent  which  a  tenant  could  afford  to  pay,  and  the 
landlord  be  willing  to  receive.  Thus,  suppose  the 
average  annual  product  of  a  piece  of  land  to  be  100 
bushels  of  wheat,  and  that  70  bushels  would  remu 
nerate  the  labor  and  capital  spent  in  its  culture,  then 
30  bushels,  the  residue,  would  be  the  clear  annual 
profit  or  rent. 

When  land  is  abundant,  compared  with  the  popu 
lation,  the  price  of  labor,  from  its  relative  scarcity, 
will,  according  to  the  laws  of  value,  be  naturally 
high,  and  that  of  land  and  its  products,  from  their 
abundance,  will  be  low.  Rents,  therefore,  which  are 
the  excess  in  value  of  those  products  above  the  cost 
of  cultivation,  will  also  be  low.  But  as,  from  the 
continual  increase  of  population,  there  is  a  growing 
demand  for  raw  produce,  and  the  supply  cannot,  from 
the  limited  extent  and  productiveness  of  the  soil,  be 
proportionally  augmented,  there  will  be  a  gradual 
rise  in  the  price  of  raw  produce,  and  consequently  of 
rents.  This  rise  is  as  natural  and  certain  as  is  the 
rise  of  corn  after  a  bad  harvest.  There  is,  in  both 
cases,  the  same  relative  alteration  between  the  supply 
and  demand — the  only  difference  being  that,  in  case 
of  a  short  harvest,  the  effect  is  produced  by  a  defi 
cient  supply,  but  in  the  other  (that  of  a  growing 
population)  it  is  produced  by  an  increased  demand.* 

Such  would  be  the  rise  and  progress  of  rents,  if  all 

*  The  same  process  may  be  effected  by  the  co-operation  of 
poor  laborers,  as  we  see  in  the  familiar  practice  of  log-rolling. 


RENT.  55 

the  land  was  fertile,  uniform  in  quality,  and  nearly 
equi-distant  from  market,  as  are  the  Delta  of  Egypt, 
the  American  bottom  in  the  State  of  Illinois,  and  a 
few  other  favored  spots  on  the  globe ;  for  a  difference 
of  fertility,  or  distance  from  market,  has  no  more 
agency  in  originating  rent,  than  has  a  difference  of 
color.  But  in  point  of  fact,  there  is,  in  almost  every 
country  of  tolerable  extent,  a  gradation  of  soils,  vary 
ing  from  great  fertility  to  utter  barrenness,  which, 
after  the  increased  demands  of  a  growing  population 
have  given  existence  to  rent,  do  make  that  rent 
higher  or  lower,  according  to  their  respective  degrees 
of  fertility. 

In  this  diversity  of  soils,  the  lands  first  cultivated 
are  those  which  are  at  once  most  fertile,  most  ac 
cessible,  and  most  easily  cultivated.  Some  of  the 
richest  are,  in  a  state  of  nature,  most  heavily  tim 
bered,  and  it  devolves  on  those  who  have  the  greatest 
command  of  capital  and  labor*  to  clear  lands  of  this 
description — it  being  a  matter  of  calculation,  whether 
it  be  more  profitable  to  cultivate  the  richest  land,  at 
a  greater  expense,  or  inferior  lands  at  a  less.  But  in 
no  long  time,  the  rich  alluvial  lands  are  certain  to  be 
taken  into  cultivation. 

As  population  advances,  and  the  demand  for  raw 
produce  consequently  increases,  soils  of  less  fertility, 
yielding  less  clear  profit,  will  naturally  be  taken  into 
cultivation  to  furnish  the  required  supply,  which 

*  Chapter  I.,  §§  12,  13. 


56  POLITICAL    ECONOMY. 

must  be  obtained  at  a  greater  cost  of  labor.  But,  to 
attribute  the  rise  of  raw  produce  which  then  exists, 
to  this  resort  to  poorer  soils,  is  to  mistake  an  effect 
for  a  cause.  Raw  produce  does  not  rise  because 
inferior  soils,  yielding  a  less  return  to  the  labor  and 
capital  expended  on  them,  are  resorted  to,  but  such 
soils  are  cultivated  in  consequence  of  the  rise  of  raw 
produce,  caused  by  the  increase  of  population.  If 
raw  produce  had  not  previously  risen,  the  inferior 
soils  could  not  have  been  taken  into  cultivation 
without  the  prospect  of  loss. 

It  is  obvious,  from  what  has  been  said,  that  land 
must  have  a  degree  of  fertility  more  than  sufficient 
to  defray  the  cost  of  cultivation,  before  it  can  yield  a 
rent ;  yet  this  limit  is  constantly  receding  from  the 
lands  of  the  best  quality,  and  extending  the  field  of 
cultivable  land  as  the  price  of  raw  produce  rises. 

But  while  land  may  be  too  poor  to  remunerate  the 
cost  of  cultivating  it,  it  can  rarely  ever  fail,  in  a  peo 
pled  country,  to  yield  some  annual  profit,  and,  conse 
quently,  rent.  It  spontaneously  furnishes  fuel  for 
warmth  and  cooking,  the  means  of  shelter  from  the 
elements,  different  kinds  of  wild  animals  and  birds, 
which  will  more  than  repay  the  labor  of  taking 
them,  as  well  as  pasturage  for  cattle. 

There  are  several  circumstances  which  check  and 
retard,  without  arresting  the  gradual  rise  of  raw  pro 
duce,  by  augmenting  its  supply : 

First.      The  resort  to  poorer  and  poorer  soils,  the 


RENTS.  57 

cultivation  of  which  is  made  profitable  only  by  the 
previous  rise  of  raw  produce,  and  which  thus  aids  in 
meeting  the  increasing  demand  for  food. 

Secondly.  By  drawing  supplies  from  a  greater  dis 
tance.  The  extent  of  this  resource  depends  upon 
the  facilities  of  transportation.  In  a  country  of 
which  roads  are  bad,  this  source  of  supply  has  a  nar 
row  field  of  action ;  but  when  there  are  good  roads 
and  canals,  supplies  can  be  obtained  from  a  distance 
proportioned  to  the  saving  in  the  cost  of  carriage. 
Since  the  introduction  of  iron  railways,  supplies  may 
now  be  obtained  from  a  distance  perhaps  of  one  hun 
dred  miles  at  as  small  a  cost  as  was  formerly  required 
for  their  transportation  in  a  wagon  twenty-five  or 
thirty  miles. 

Thirdly.  Increasing  the  productiveness  of  the  soil 
by  an  outlay  of  capital  in  the  purchase  of  manures 
and  vegetable  stimulants,  such  as  guano,  gypsum,  and 
the  like.  These  often  increase  the  value  of  the  pro 
ducts  of  the  soil  far  beyond  their  cost ;  and  it  some 
times  may  be  so  great  as  to  make  tjie  increased  sup 
ply  exceed  the  increased  demand,  arid  thus,  for  the 
time,  lower  the  price  of  raw  produce.  But  even 
then,  inasmuch  as  the  landlord  gains  more  by  the 
increased  quantity  than  he  loses  by  the  fall  of  price, 
rents  would  thereby  be  raised.*  To  the  above  tem- 


*  It  deserves  to  be  remarked  that  all  these  three  expedients 
for  increasing  the  supplies  of  raw  produce  to  meet  the  demand 
of  growing  numbers  have  been  referred  to  for  the  purpose  of 


58  POLITICAL     ECONOMY. 

porary  checks  to  the  advance  in  price  of  raw  produce 
we  may  add  improvements  in  husbandry;  whether 
by  the  mode  of  tillage,  the  rotation  of  crops,  or  by 
ameliorating  processes,  such  as  the  turnip  or  clover 
culture.  But  these  improvements,  like  the  use  of 
manures,  while  they  tend  to  lower  the  price  of  raw 
produce  by  augmenting  the  supply  beyond  the  tem 
porary  demand,  tend  also  to  raise  rents : 

First.  Because,  whatever  may  be  the  addition  to 
the  supply  of  the  means  of  subsistence,  population 
will  ultimately  raise  the  demand  to  the  same  level ; 
and,  the  price  being  also  thereby  raised,  rents  must 
continue  to  rise. 

Secondly.  Without  waiting  for  a  further  increase 
of  mouths  to  be  fed,  the  immediate  effect  of  such 
improvements  is  to  raise  rents ;  since  here,  as  in  the 
increased  supply  of  raw  produce,  from  a  further  out 
lay  of  capital,  as  already  mentioned,  the  landlord 
will  gain  more  by  the  addition  to  the  quantity  than 
he  would  lose  by  the  reduction  of  price. 

It  has  indeed  been  maintained  by  writers  of  repu 
tation  that  the  effect  of  improvements  in  agriculture, 
whether  in  saving  labor  or  increasing  the  productive 
ness  of  the  soil,  is  to  lower  rents ;  but  this  conclusion 
seems  to  be  directly  at  variance  with  the  laws  of 

explaining  the  rise  and  progress  of  rent,  though  they,  —  the  two 
first  always,  and  the  third  partially,  —  as  well  as  rent,  are  the 
natural  effect  of  the  rise  of  raw  produce,  caused  by  the  increase 
of  population. 


RENTS.  59 

value  and  price.  The  natural  effect  of  such  improve 
ments  is  unquestionably  to  lessen  the  price  of  raw 
produce ;  but  an  increased  demand  and  consumption 
would  then  be  as  natural  a  consequence  as  had  been 
the  fall  of  price ;  and  such  increased  demand,  check 
ing  the  fall  of  price  before  the  reduction  was  in  pro 
portion  to  the  enlarged  supply,  the  market  value  of 
the  whole  crop  would  be  greater  than  it  had  previ 
ously  been ;  and  the  clear  profit  or  rent  would  conse 
quently  be  higher. 

The  preceding  view  cannot  be  impugned  except  by 
assuming  that  the  demand  for  raw  produce,  in  pro 
portion  to  the  population,  is  a  fixed  quantity,  which 
cannot  be  increased.  But  the  great  difference  in  the 
corn  crops  of  every  country,  according  to  the  sea 
sons, —  they  being  twice  or  thrice  as  much  in  a  good 
season  as  a  bad  one,  —  shows  that  the  consumption 
even  of  corn  is  susceptible  of  great  contraction  or 
expansion,  according  to  the  greater  or  less  abundance 
of  the  supply.  When  the  supply  is  small,  the  con 
sumption  is  lessened,  partly  from  choice,  but  still 
more  from  necessity ;  and  cheaper  food  is  substituted 
for  the  more  costly.  But  when  the  supply  is  large, 
the  consumption  is  more  liberal,  both  as  to  the  quan 
tity  and  quality  ;  and  there  is  more  waste,  more  dis 
pensed  in  charity,  more  consumed  in  manufactures, 
and  lastly,  more,  from  the  reduced  price,  ean  find  a 
market  at  a  distance.  If  these  were  not  the  natural 


60  POLITICAL     ECONOMY. 

consequences  of  an  increased  production,  the  agricul 
tural  class  would  gain  more  by  a  short  crop  —  sup 
posing  it  to  be  general  —  than  by  a  large  one ;  and 
the  instinctive  sagacity  of  self-interest  would  be  at 
fault  with  farmers  when  they  pray,  as  they  ever  do, 
for  fruitful  seasons,  though  their  neighbors  should 
share  in  the  same  good  fortune,  and  when  they  feel 
assured  that  in  bad  seasons  no  rise  of  price  can  ade 
quately  compensate  them  for  the  shortness  of  the 
crops.  Another  circumstance  which  tends  to  raise 
rents  is  the  improvement  in  the  means  of  transporta 
tion  by  canals  and  roads.  The  chief  cause  of  the 
difference  between  the  prices  of  raw  produce  in  two 
places  is  the  cost  of  transportation ;  and  all,  or  nearly 
all,  that  can  be  saved  of  this  expense,  is  so  much 
added  to  the  exchangeable  value  of  the  produce. 

The  same  saving  also  enlarges  the  sphere  of  the 
market,  and  causes  a  traffic  between  places,  which, 
at  the  previous  cost  of  transport,  could  not  be  carried 
on  without  loss.  Thus,  by  means  of  railways,  the 
oyster  trade  is  now  extended  from  the  Atlantic  coast 
to  every  portion  of  the  interior ;  and  though  many 
places  may,  in  this  way,  lose  a  portion  of  their  former 
supplies  of  provisions,  yet  this  loss  may  be  compen 
sated,  or  more  than  compensated,  by  the  new  supplies 
then  afforded  from  more  distant  districts.  Thus,  if  New 
York  now  draw  off  from  Philadelphia  much  of  the 
butter,  milk,  poultry,  and  fruits,  with  which  the  latter 


RENT.  61 

city  had  been  previously  supplied,  she,  in  turn,  is  also 
furnished  with  new  supplies  of  the  like  articles  from 
more  distant  sources,  by  which  enlarged  traffic,  both 
buyers  and  sellers,  that  is,  both  producers  and  con 
sumers,  are  benefited. 

In  truth,  a  very  considerable  portion  of  the  labor 
of  every  community  is  expended,  not  in  the  business 
of  producing  or  fabricating  commodities,  but  merely 
in  transporting  these  products  of  industry  from  one 
place  to  another,  where  they  have  greater  value ;  and 
whatever  can  be  saved  of  this  expense  of  transport  is 
so  much  added  to  the  revenue  of  the  community. 

There  are  circumstances  which  have  a  direct  ten 
dency  to  lower  rents.  One  of  these  is  a  diminution 
of  the  population,  however  caused,  whether  by  epi 
demic  diseases,  scarcity,  or  emigration  —  always  sup 
posing  that  the  population  was  not  previously  too 
dense  for  the  whole  of  it  to  be  profitably  employed. 
This  redundancy  of  numbers  seemed  to  have  existed 
in  Ireland  a  few  years  since ;  for,  after  an  efflux  of 
population  so  great  as  to  make  the  numbers  less  by 
the  census  of  1851  than  they  had  been  by  the  census 
of  1841,  an  encouragement  was  given  to  the  employ 
ment  of  labor  which  benefited  the  community  as 
well  as  the  laboring  classes,  and  consequently  raised 
rents. 

The  emigration  which  is  continually  taking  place 
from  the  Southern  to  the  Western  and  Southwestern 
6 


62  POLITICAL     ECO  NO  MY. 

States,  tends  to  keep  rents  stationary  in  the  first- 
named  States ;  and,  in  some  few  districts  which  have 
declined  in  population,  rents  may  have  somewhat 
diminished. 

Taxation  is  another  cause  of  the  fall  of  rents.  A 
tax  on  the  land  being  so  much  taken  from  its  profits, 
is  the  same  as  so  much  taken  from  rent.  A  tax  on 
labor,  too,  by  increasing  the  cost  of  cultivation,  would 
have  a  similar  tendency. 

Town  lots,  like  land  in  the  country,  have  a  price, 
and  consequently  yield  a  rent  according  to  the  profit 
which  they  can  afford  to  the  occupant.  But  the 
sources  of  profit  in  the  two  cases  are  very  different. 
In  the  case  of  arable  land,  the  profit  arises  from  the 
productiveness  of  the  soil,  but  in  the  case  of  town  lots 
it  arises  from  the  facilities  afforded  to  industry. 

Men  are  induced  to  congregate  in  cities  and  towns, 
partly  by  the  social  instinct,  and  partly  for  the  bene 
fits  of  co-operation,  by  which  many  things  are  done 
sooner  and  better  than  could  be  effected  by  a  single 
individual,  and  many  more  which  he  could  not  per 
form  at  all. 

The  proportion  of  the  population  thus  congregated 
is  apt  to  increase  with  the  increasing  density  of 
numbers.  In  the  United  States,  where  the  popula 
tion  is  as  yet  thin,  the  cities  and  towns  of  above 
three  thousand  inhabitants,  contained  but  one-sixth 
of  the  whole  population  in  1850.  In  1840,  they  con- 


RENT.  63 

tained  not  one-tenth.     In  England,  such  towns  con 
tain  about  one-half  of  the  population. 

They  are  more  favorable  to  the  cultivation  of  science 
and  the  arts  of  every  kind.  If  they  also  more  favor 
human  depravity  and  misery,  they  afford  readier 
means  of  punishing  the  one,  and  of  alleviating  the 
other.  The  modes  of  human  happiness  are  so  differ 
ent  in  town  and  country  life,  that  it  is  difficult  to 
compare  them ;  but  whatever  may  be  the  result  of 
the  comparison,  the  constant  tendency  of  cities,  in 
all  free  arid  industrious  communities,  to  increase,  is 
inevitable. 

Cities  and  towns,  according  to  the  numbers  there 
congregated,  offer  the  best  field  for  buying  and  selling, 
and  obtaining  the  profits  of  commerce.  Lots,  there 
fore,  increase  in  value  with  the  size  of  the  town, 
until  a  certain  point  is  reached,  and  the  rents  of  such 
lots  will  be  in  proportion  to  their  price.  As  a  general 
rule,  a  site  for  a  shop  in  a  city  is  valuable  in  propor 
tion  to  the  number  of  persons  who  have  a  ready 
access  to  it,  which  number  will  be  partly  in  propor 
tion  to  the  population  of  the  city,  and  partly  to  the 
accessibility  of  the  particular  site  —  twenty,  or  even 
fifty,  times  as  many  persons  commonly  passing  in  a 
day  by  one  lot  or  site,  as  in  some  others.  The  same 
circumstances  which  raise  the  value  of  the  lots,  in 
the  same  degree  raise  the  rents,  so  that  while  lots 
generally  in  small  towns,  and  some  of  them  on  the 


G4  POLITICAL    ECONOMY. 

borders  of  large  ones,  may  sell  for  little  more  than 
land  in  the  vicinity,  others  may  sell  for  a  hundred 
times  as  much. 

Other  circumstances  may  occasionally  enhance  the 
value  of  town  lots,  as  when  they  afford  pleasant  pros 
pects,  are  open  to  pure  air,  or  are  in  agreeable  neigh 
borhoods  ;  but  it  is  the  advantage  which  some  sites 
possess  over  others  for  traffic  which  constitutes  their 
highest  pecuniar}'  value.  In  the  same  degree  that 
cities  thrive  in  business,  and  increase  in  population, 
the  shops  improve  in  the  extent,  the  variety,  and  the 
attractiveness  of  their  wares,  and  rents  rise  in  propor 
tion.  When  the  population  diminishes,  rents  propor 
tionally  decline. 

The  rent  paid  for  houses  in  town  consists,  in  addi 
tion  to  the  rent  of  the  lot,  of  the  interest  on  the  cost 
of  the  building,  with  some  allowance  for  ordinary 
repairs,  and  gradual  decay. 

It  may  be  remarked  that  land,  including  lots  and 
houses  in  town,  yield  less  than  the  average  profits 
of  capital,  partly  on  account  of  the  greater  security 
of  the  capital,  and  partly  because,  being  visible  to  all, 
and  appreciable  by  all,  they  confer  on  the  proprietor 
somewhat  more  of  influence  in  society  than  personal 
property. 

It  often  happens,  in  cities,  that  one  person  owns 
the  house,  and  another  the  ground  on  which  it  stands. 
For  this,  the  owner  of  the  house  pays  a  ground-rent, 


RENT.  65 

and  the  house  is  a  security  for  its  payment.  It  is 
thus  a  favorite  mode  of  investment  with  capitalists, 
and  hence  nearly  all  the  houses  in  London  pay  a 
ground-rent.  It,  however,  occasionally  happens  in 
declining  towns,  or  when  buildings  have  been  erected 
on  sites  unfavorable  to  business,  or  beyond  its  de 
mands,  that  the  house  and  lot  together  will  not  sell 
for  as  much  as  will  pay  the  ground-rent. 


CHAPTER  VI. 

THE  DIFFERENT  SPECIES  OF  RENT. 

IT  often  happens  that  the  proprietor  of  land  wants 
the  skill,  or  the  capital,  or  the  inclination  to  cultivate 
it,  and  by  renting  it,  he,  the  tenant,  and  the  State 
would  be  gainers.  The  benefit  may,  however,  be 
materially  affected  by  the  length  of  the  term  for 
which  the  land  is  rented.  In  long  leases,  the  tenant 
is  interested  in  manuring  the  soil,  and  in  making 
other  improvements ;  but  in  short  ones,  his  interest 
is  rather  a  present  than  a  future  profit,  and  to  expend 
no  money  which  will  not  give  an  immediate  or  a 
short  return. 

In  the  United  States,  where,  from  the  cheapness 
of  land,  so  many  are  able  to  buy  it,  and  where  almost 
every  man  hopes  to  own  it,  leases  from  year  to  year, 
to  be  terminated  at  the  pleasure  of  either  party,  after 
notice,  are  very  common ;  and  the  landlord  endea 
vors  to  guard  against  their  inherent  disadvantages  by 
strict  stipulations  as  to  the  course  of  cultivation,  the 
rotation  of  crops,  manuring,  and  the  like ;  but  these 
engagements,  being  often  evaded,  or  unfaithfully 
executed,  are  prolific  of  dispute  and  mutual  discon- 

(66) 


DIFFERENT  SPECIES  OF  RENT.     67 

tent.  Probably  England  owes  the  excellence  of  her 
husbandry  to  no  one  thing  so  much  as  long  leases. 

Lands  are  sometimes  rented  for  a  proportional  part 
of  the  crop  ;  which  proportion  varies  from  a  fourth 
to  a  half,  according  to  the  richness  of  the  soil ;  and 
occasionally  for  more  than  a  half,  as  in  the  case  of 
meadows,  and  spots  of  extraordinary  fertility.  The 
difference  of  profit  between  the  best  and  the  worst 
arable  soils  is  yet  greater  than  the  difference  of  rent 
stated ;  but  as,  in  this  country,  there  is  little  land 
rented  which  has  not  its  value  to  the  tenant  enhanced 
by  a  dwelling-house,  fences,  and  other  improvements, 
there  are  scarcely  any  portions,  however  poor,  which 
rent  for  less  than  one-fourth.  Even  as  to  these  infe 
rior  soils,  there  is,  in  the  first  settled  States,  more 
competition  among  the  class  of  renters  than  that  of 
landlords.  The  proportion  for  rent  is  greatest  in  the 
most  densely  peopled  States. 

Very  frequently  land  is  rented  for  an  annual  sum 
of  money  which  is  somewhat  less  than  its  estimated 
value ;  the  proprietor  preferring  the  certainty  of 
a  smaller  sum  to  the  mere  chance  of  a  larger  one. 
This  is  the  general  mode  of  renting  in  England.  It 
is  the  best  method  in  a  rich  country. 

There  is  another  kind  of  rent,  where  the  land  is 
cultivated  at  the  joint  expense  of  the  landlord  and 
tenant,  who  divide  the  produce  between  them.  This 
is  called  the  Metayer  system.  It  prevails  extensively 
in  France  and  other  parts  of  continental  Europe,  and 


68  POLITICAL    ECONOMY. 

is  not  unfrequent  in  the  United  States.  It  admits  of 
infinite  modifications,  as  to  the  proportion  which  the 
parties  respectively  provide  of  the  live  stock,  the 
seed,  taxes,  and  implements  of  husbandry.  Here, 
too,  the  terms  of  the  bargain  are  most  advantageous 
to  the  landlord  in  the  most  densely  populated 
districts. 

The  metayer  system  has  been  generally  condemned 
by  English  writers,  as  liable  to  the  objections  made 
to  short  leases,  and  as  favoring  improvident  culture. 
Yet  some  parts  of  Europe  where  it  prevails  have  a 
prosperous  and  happy  tenantry. 

In  the  northern  half  of  the  United  States,  the 
larger  proprietors  of  the  land  cultivate  it  by  hired 
laborers;  in  which  case,  the  rent  or  profits  of  the 
soil  are  combined  with  the  profits  of  capital. 

In  the  southern  division,  the  larger  tracts  of  land 
are  generally  cultivated  by  slaves,  while  many  of  the 
small  tracts  are  tilled  by  their  proprietors.  In  both 
cases,  the  profits  of  the  land  are  combined  with  those 
both  of  labor  and  capital. 

In  all  cases  in  which  land  is  cultivated  by  the  pro 
prietor,  a  considerable  part  of  the  profits  of  the  soil 
consists  in  the  supplies  furnished  to  his  family  in  fuel, 
and  in  various  kinds  of  aliment,  as  meats,  poultry, 
milk,  butter,  and  garden  stuff,  which  commonly 
amount  to  a  respectable  rent,  though  they  are  often 
overlooked  in  the  estimates  made  of  the  profits  of 
landed  property. 


DIFFERENT     SPECIES     OF     RENT.  69 

Rent  of  Mines. — Various  minerals  useful  to  man  are 
also  sources  of  rent.  They  differ  from  arable  land 
in  this  important  particular :  they  possess  not,  like 
the  fertility  of  the  soil,  the  advantage  of  being  per 
petually  renewed  by  the  spontaneous  bounty  of  na 
ture  ;  but  they  have  been  stored  away,  by  the  same 
benignant  agency,  in  the  bowels  of  the  earth,  whence 
they  are  drawn  at  great  cost,  and  always  by  a  dimi 
nution  of  their  quantity.  It  depends  upon  the  cost 
of  working  them,  and  their  relative  scarcity,  whether 
they  are  able  to  yield  rent;  for  when  these  minerals 
are  very  abundant  near  the  surface  of  the  earth, 
their  price  may  not  be  more  than  sufficient  to  repay 
the  labor  and  capital  expended  in  bringing  them  to 
market. 

One  of  the  most  valuable  of  these  minerals  is  coal, 
as  fuel,  both  for  household  purposes  and  for  manu 
factures,  especially  for  the  fabrication  of  iron.  It  is 
to  this  mineral  that  England  is  mainly  indebted  for 
the  great  extent  and  excellence  of  her  manufactures ; 
for  it  constitutes  the  fuel  of  her  steam-engines,  which 
furnish  her,  at  a  moderate  cost,  with  an  unlimited 
motive  power. 

As  population  increases,  the  demand  for  coal  has 
a  correspondent  increase,  but  the  cost  of  extracting 
it  from  its  native  beds  naturally  augments  as  the 
mines  grow  deeper.  This  additional  cost  may,  how 
ever,  be  counterbalanced  by  improved  machinery  and 
a  larger  application  of  capital.  Should  the  increased 


rfU  POLITICAL    ECONOMY. 

demand  for  coal  have  more  effect  in  raising  its  price 
than  the  counteractions  mentioned  have  in  lowering 
it,  then  all  of  its  increased  value,  beyond  the  cost  of 
bringing  it  to  market,  would  be  rent.  In  this  way, 
coal-mines,  exempt  from  neighboring  competition, 
sometimes  yield  a  high  rent. 

Next  to  coal,  iron  is  the  mineral  most  extensively 
used  by  man.  It  has,  however,  been  furnished  in 
such  abundance  by  nature,  that  its  ordinary  price 
merely  repays  the  labor  and  capital  expended  in  con 
verting  its  ore  into  metal,  with  a  more  or  less  liberal 
profit,  without  yielding  any  rent.  Furnaces  and 
forges  for  making  iron  may  indeed  be  occasionally 
leased,  but  the  consideration  paid  by  the  tenant, 
which  is  called  a  rent,  like  that  paid  for  houses,  is 
merely  an  interest  on  the  capital  expended  on  the 
buildings  and  machinery.  Where,  however,  the  ma 
chinery  of  these  establishments  is  worked  by  running 
water,  the  gift  of  nature,  this  moving-power,  like 
that  of  mills,  may  be  an  exception,  and  yield  an 
annual  rent. 

Mines  of  the  precious  metals,  when  they  can  be 
monopolized,  may  yield  a  large  rent,  as  the  value  of 
the  products  may  greatly  exceed  the  cost  of  obtaining 
them.  Where  the  lands  containing  the  precious 
metals  are  free  to  be  worked  by  all,  and  when  the 
yield  is  so  great  as  it  has  been  in  California  and 
Australia,  the  profits  being  the  joint  result  of  the 
bounty  of  nature  and  the  industry  of  man,  seem  in 


DIFFERENT    SPECIES    OF    RENT.  71 

part  analogous  to  rent ;  and  where  spots  of  extraor 
dinary  richness  are  regarded  by  custom  as  the  property 
of  the  occupants,  they  may  be  sold  and  transferred 
to  others — in  which  case,  the  compensation  received 
has  all  the  features  of  rent. 

The  time  may  come  when  all  the  auriferous  lands 
in  California  and  Australia  will  be  private  property, 
and  yield,  according  to  their  richness,  an  annual  profit 
to  the  proprietor,  whether  he  work  them  himself,  or 
let  them  to  a  tenant. 

Salt-mines  and  springs  occasionally  afford  a  rent. 
This  mineral,  so  useful  as  a  condiment  to  our  food, 
and  for  preserving  meat  and  fish  from  putrefaction, 
as  well  as  for  its  extensive  use  in  the  laboratory  and 
in  manufactures,  has  been  furnished  by  nature  in 
such  profusion,  that  its  quantity,  principally  in  a 
state  of  solution,  would  be  sufficient,  if  separated  from 
the  water,  to  cover  the  whole  surface  of  our  globe 
with  a  layer  of  salt  probably  more  than  a  hundred 
feet  deep.  But  with  all  this  abundance,  there  are 
many  districts  of  country  which  obtain  this  commo 
dity  from  a  great  distance.  In  the  United  States, 
the  Atlantic  portion  is  supplied  principally  from 
Liverpool  and  Turks  Island.  The  Western  States 
are  supplied  from  the  salt-works  of  New  York,  Vir 
ginia,  and  Pennsylvania. 

When  salt  springs  or  mines  are  solitary,  or  nearly 
so,  they  may  yield  a  very  high  rent.  The  proprietor, 
having  a  monopoly  of  this  indispensable  article,  is 


72  POLITICAL    ECONOMY. 

able  to  obtain  a  liberal  price  for  a  large  quantity  in 
the  sale  of  which  he  has  no  competitor.  This  was 
the  case  with  Preston's  salt-works  on  the  Holstein,  in 
Virginia.  He  found  a  vent  for  all  that  he  made  at  a 
dollar  a  bushel;  but  an  enterprising  rival  having 
purchased  a  piece  of  land  in  the  vicinity,  on  which, 
as  he  rightly  conjectured,  salt  water  from  the  same 
spring  could  be  found,  sunk  a  well,  and  at  a  great 
depth  obtained  water  still  more  strongly  impregnated 
with  salt  than  Preston's.  To  secure  the  monopoly 
entirely  to  himself,  he  then  rented  Preston's  spring 
for  $10,000  a  year,  and  closed  it  up.  In  this  way 
the  public  was  deprived  of  the  effect  of  competition, 
and  of  the  full  benefit  of  the  bounty  of  nature. 

On  the  Kanawha,  in  the  same  State,  salt  springs 
are  found  to  an  extent  of  several  miles  on  the  banks 
of  the  river,  and  there  salt  is  produced  to  the  amount 
of  many  millions  of  bushels  in  a  year.  The  salt 
works  at  Salina,  in  the  interior  of  New  York,  are 
still  more  productive.  Such  of  these  springs  as  have 
extraordinary  richness,  are  rented  according  to  the 
average  value  of  their  annual  product  beyond  the  cost 
of  making  the  salt. 

In  time  of  war,  salt  is  here  extensively  manufac 
tured  from  sea  water,  and,  to  some  extent,  in  time 
of  peace.  Should  the  springs  which  now  furnish  so 
large  a  part  of  the  quantity  consumed,  become  in 
process  of  time  exhausted,  or  too  weak  to  repay  the 


DIFFERENT     SPECIES    OF     RENT.  73 

cost  of  working  them,  the  water  of  the  ocean  may 
become  our  only  domestic  resource. 

Fisheries  are  also  a  source  of  rent.  The  shores  of 
the  Potomac,  and  some  other  of  our  principal  rivers, 
abound  in  the  spring  with  shad  and  herring,  but  there 
are  particular  spots  on  their  banks  which  are  alone 
adapted  to  hauling  the  seine  —  the  only  way  in 
which  those  fish  can  be  taken  in  large  quantities. 
Sometimes  the  proprietor  of  a  fishery  prefers  renting 
it  to  retaining  it  for  his  own  use ;  and,  since  some 
times  as  many  as  100,000  fish  are  taken  at  a  single 
draught,  these  fisheries  are  very  profitable,  and  their 
rent  is  proportionally  high. 

Wharves,  quays,  and  the  like  facilities  to  commerce, 
are  frequent  subjects  of  rent. 

In  all  these  cases  of  mines,  salt-works,  fisheries, 
mills,  and  other  productive  establishments,  as  in  the 
instance  of  cultivated  land,  whenever,  from  the  rela 
tion  between  the  supply  and  the  demand,  the  value 
of  the  commodity  produced  exceeds  the  cost  of  pro 
ducing  it,  such  excess  is  rent,  which  is  received  either 
wholly  by  the  proprietor,  or  partly  by  him  and  partly 
by  his  tenant,  the  temporary  occupant. 


CHAPTER   VII. 

ON   LABOR. 

IT  would  be  to  little  purpose  that  man  had  been 
liberally  furnished  with  valuable  materials,  if  they 
were  not  also  improved,  by  his  industry  and  skill,  into 
the  means  of  ministering  to  his  wants  and  comforts. 
Behold  the  untutored  savage,  earning  with  great 
effort  a  subsistence  from  the  wild  game  of  the  forest, 
which  is,  moreover,  so  precarious  that  he  sometimes 
perishes  fr.om  want,  spending  his  life,  when  not  en 
gaged  in  hunting  or  war,  in  a  torpor  both  of  body 
and  mind.  Compare  him  now  with  the  civilized  man, 
surrounded  by  the  benefits  of  a  well-ordered  house 
hold,  adding  to  the  gratifications  of  his  physical 
nature  the  pleasures  of  reading,  of  music,  of  conver 
sation,  and  the  numberless  enjoyments  of  civilized 
life.  All  these  advantages  he  owes  to  the  exertions 
of  his  own  industry  and  skill,  and  to  the  industry 
and  skill  of  those  who  had  preceded  him,  or  who  now 
co-operate  with  him. 

He  has  rendered  the  mineral,  the  animal,  and  the 
vegetable  world  subservient  to  his  various  purposes. 
One  species  of  mineral  earth,  he,  by  dint  of  great 
labor,  converts  into  iron,  which  is  again  transformed 

(T4) 


LABOR.  75 

into  tools  and  instruments  of  various  forms  and 
dimensions,  from  an  anchor  or  steam-engine  to  the 
balance-spring  of  a  watch,  or  a  cambric  needle.  He 
uses  gold  and  silver  for  one  set  of  purposes,  and  the 
baser  metals  of  copper,  tin,  lead,  and  zinc  for  others. 
He  multiplies  the  utility  of  the  precious  metals  by 
converting  them  into  leaves  of  extreme  thinness,  and 
has  coined  them  into  money,  by  which  he  saves  him 
self  infinite  labor  in  exchanging  that  which  he  can 
spare  for  that  which  he  wants.  He  draws  from  the 
bowels  of  the  earth  fuel  to  keep  him  warm,  and  to 
support  the  fires  required  by  the  operations  of  his 
ingenuity  and  art ;  salt,  also,  to  preserve  his  meat,  and 
render  his  food  at  once  palatable  and  wholesome; 
and  numerous  other  minerals,  useful  as  medicines  or 
for  manufactures. 

From  the  animal  world  he  derives  materials  both 
for  his  food  and  his  clothing.  From  one  portion  he 
obtains  furs,  from  another  wool,  which,  by  a  long 
train  of  ingenious  processes,  he  converts  into  clothing 
at  once  soft,  light,  and  warm.  From  a  worm  his 
indefatigable  industry  has  obtained  the  materials  of 
a  yet  more  brilliant  and  ornamental  apparel ;  and  to 
all  these  he  imparts  dyes  that  rival  the  hues  of  the 
rainbow.  The  skins  of  some  animals  he  converts 
into  leather,  of  different  descriptions,  and  adapted  to 
various  uses ;  and  from  the  bristles  of  the  hog,  the 
filthiest  of  all  animals,  he  fabricates  twenty  kinds  of 
brushes  to  serve  the  purposes  of  cleanliness  in  his 


76  POLITICAL     ECONOMY. 

person  and  dwelling.  The  largest  terrestrial  animal 
furnishes  him  with  ivory  for  one  set  of  uses,  and  the 
largest  marine  animal  with  whalebone  for  another 
set.  He  uses  the  camel  and  the  horse,  as  well  as  the 
elephant^  for  transportation,  and  to  assist  his  opera 
tions  both  in  peace  and  war.  The  dog  is  his  willing 
slave,  to  aid  him  in  killing  other  animals  that  are 
either  noxious  or  serve  for  food.  He  does  not  confine 
his  powers  to  the  land ;  he  descends  to  the  rivers  and 
sea,  and  drains  from  them  in  unexhaustible  abun 
dance  food  equally  palatable  and  nutritious. 

He  has,  by  the  art  of  navigation,  gradually  im 
proved  by  numberless  ingenious  inventions,  encoun 
tered  and  overcome  the  dangers  of  the  ocean,  has 
visited  regions  placed  at  the  farthest  extremities  of 
the  earth,  and  has,  finally,  circumnavigated  the  globe 
itself.  He  has,  by  these  means,  transmitted  to  one 
region  the  arts  of  life  discovered  in  another,  so  that 
each  one  has  profited  by  the  improvements  of  the 
rest. 

The  vegetable  world  also  offers  a  boundless  field 
for  the  exercise  of  human  industry.  From  this 
source  he  obtains  the  largest  supply  of  his  food, 
which  is  derived  from  the  seeds  of  one  tribe  of  plants, 
the  leaves  of  another,  and  the  roots  of  a  third.  From 
the  juices  of  several  plants  he  obtains  what,  of  all 
sweets,  is  the  most  grateful  to  the  human  palate ; 
from  others,  wine  and  beer,  tea,  coffee,  and  chocolate, 
to  cheer  and  nourish  his  nervous  system.  Of  the 


LABOR.  77 

trees  of  the  forest  he  constructs  houses,  ships,  car 
riages,  household  furniture,  and  utensils  in  endless 
variety.  From  one  plant  he  obtains  the  materials 
for  light  clothing  at  a  less  expense  than  from  any 
other  source.  From  vegetables  he  derives  dyes  of 
every  hue,  and  medicines  for  the  cure  or  mitigation 
of  every  disease.  By  means  of  ingenious  mill  ma 
chinery,  he  makes  running  water,  or  the  stream,  pul 
verize  one  set  of  vegetables  into  flour,  spin  another 
into  thread,  and  then  weave  it  into  cloth,  press  out 
the  oil  from  the  olive,  cider  from  the  apple,  separate 
cotton  from  its  seed,  and  convert  trees  into  planks. 
He  transforms  flax  and  hemp  into  lines  and  ropes,  as 
well  as  cloth ;  and  in  a  considerable  portion  of  the 
fabrics  of  human  art,  mineral,  animal,  and  vegetable 
substances  have  been  combined  to  produce  them. 
Thus  a  ship,  a  coach,  a  piano,  and  a  book  are  the 
joint  result  of  all  three ;  and  even  a  pair  of  boots 
has  commonly  the  same  threefold  origin. 

As,  in  civilized  society,  human  labor  and  skill  are 
principally  employed  either  in  producing  the  raw 
materials,  or  in  giving  to  those  materials  new  forms, 
suited  to  the  uses  of  man,  or  in  transporting  either 
those  materials  or  manufactures  from  place  to  place, 
all  industrious  employments  have  been  divided  into 
1.  Those  of  agriculture,  mining,  and  fishing ;  2.  Those 
of  manufactures,  and  3.  Those  of  commerce;  which 
we  will  now  successively  notice. 

7* 


TS'IV 


,...-  ..UN:  I  \ 


CHAPTER  VIII. 

AGRICULTURAL    INDUSTRY. 

WHEN  the  cultivation  of  the  earth  was  first  resorted 
to  for  the  purpose  of  meeting  the  wants  of  an  increas 
ing  population,  agriculture  was  naturally  rude  and 
imperfect,  compared  with  what  it  afterwards  became. 
The  labor  by  which  it  was  then  carried  on  was  pro 
bably  that  of  the  retainers  about  the  large  proprietors, 
as  we  have  seen  in  the  clans  of  Scotland.  A  part  of 
this  labor  found  employment  in  the  culture  of  the 
soil,  and  a  part  in  the  practice  of  arts  which  were 
suited  to  their  humble  skill  and  the  simple  wants  of 
their  employers.  They  were  smiths,  tailors,  wrights, 
and  masons ;  and  they  being  designated  by  their  occu 
pations,  these  became  the  most  common  surnames. 

But  this  mode  of  culture,  equally  unfavorable  to  a 
large  production  and  a  frugal  consumption,  was  not 
likely  to  last;  and,  from  the  pressure  of  increasing 
numbers,  some  of  these  retainers,  whether  employed 
in  husbandry  or  handicraft,  would  seek  independent 
homes  by  renting  small  tracts  from  their  former  em- 
plo}<er.  At  first,  from  the  abundance  of  land  com 
pared  with  the  population,  the  tenant  would  receive 
nearly  all  the  produce  that  he  made ;  but  since,  from 

(T8) 


AGRICULTURAL    INDUSTRY.  /9 

the  increase  of  numbers,  the  value  of  that  produce 
would,  as  we  have  seen,  be  steadily  rising,  the  remu 
neration  of  labor  would  as  steadily  diminish. 

It  is  laid  down  by  some  theorists  that,  in  conse 
quence  of  the  admitted  rise  of  raw  produce,  in  the 
progress  of  society,  the  wages  of  labor,  which  must 
be  sufficient  to  support  the  laborer,  must  also  rise. 
But  this  is  a  contradiction.  The  only  sense  in  which 
raw  produce  can  be  said  to  rise,  is  that  it  will  exchange 
for  more  labor,  which  is  the  same  thing  as  saying 
that  labor  has  fallen.  It  is  then  a  fundamental  law 
of  society,  that  raw  produce,  in  the  progress  of  increase 
of  numbers,  tends  to  increase  in  value,  and  labor  to 
diminish.  They  both  are  the  consequences  of  the 
same  change  in  the  demand  and  supply  of  labor  and 
its  means  of  subsistence;  for  by  the  continual  increase 
of  population,  and  the  limited  quantity  of  land,  labor 
becomes  gradually  cheaper  by  its  increased  supply, 
and  raw  produce  dearer  by  the  increased  demand  for 
it.  Thus  we  find  labor  to  be  cheaper  in  China  than 
in  Europe,  and  cheaper  in  Europe  than  America, 
while  raw  produce  has  in  those  countries*  a  corre 
spondent  dearness. 

The  source  of  this  error  is  the  supposition  that  the 
laborer's  subsistence  is  a  fixed  quantity ;  but  this  sub 
sistence  is  susceptible  of  great  variation.  It  is  true 
that  the  food  consumed  does  not  admit  of  much  re 
duction  in  the  quantity,  consistent  with  the  physical 
well-being  of  the  individual,  but  it  makes  a  great 


80  POLITICAL    ECONOMY. 

difference  in  its  value,  whether  that  food  is  animal  or 
vegetable,  and  whether  it  is  of  one  species  of  vegetable 
or  another.  A  man  may  consume  animal  food  libe 
rally  or  sparingly;  lie  may  subsist  chiefly  on  bread 
made  of  wheat,  rye,  or  oats,  or  lastly,  on  potatoes. 
The  same  portion  of  soil  will  support  a  greater  or  less 
number  of  human  beings  as  they  subsist  on  one  or 
the  other  of  these  aliments.  The  difference  may  be 
that  a  square  mile  would  support  80  persons  who 
consume  animal  food  abundantly;  120  persons  who 
consume  it  sparingly;  160  or  180,  when  they  subsist 
chiefly  on  grain ;  and  from  300  to  400,  when  they 
subsist  on  potatoes.  As  population  advances,  and 
the  means  of  subsistence  become  comparatively  more 
difficult  of  attainment,  a  portion  of  the  community 
must  pass  from  a  dearer  to  a  cheaper  mode  of  sub 
sistence,  or  the  population  must  become  stationary. 
Past  experience  seems  to  show  that  when  this  alter 
native  is  presented,  the  multiplying  propensity  will 
prevail,  and  the  cheaper  mode  of  subsistence  be 
resorted  to. 

From*  the  preceding  views  it  follows  that,  in  the 
earlier  stages  of  society,  both  raw  produce,  and  the 
fabrics  of  human  labor  and  ingenuity,  are  obtained 
with  difficulty.  In  the  second  stage  they  are  both 
plentiful,  especially  raw  produce.  In  the  third  stage 
the  laborer  can  obtain  manufactures  with  more  ease, 
but  raw  produce  with  increased  difficulty.  The  people 
of  Europe,  during  the  middle  ages,  were  in  the  first 


AGRICULTURAL    INDUSTRY.  81 

stage.  The  people  of  the  United  States  have  always 
been  in  the  second  stage ;  and  the  European  nations 
are  now  in  the  third. 

The  decline  in  the  remuneration  of  labor,  incidental 
to  the  third  stage,  though  so  probable,  and  in  accord 
ance  with  the  past  history  of  mankind,  seems  not  to 
be  inevitable.  England,  by  means  of  her  extensive 
commerce,  the  excellence  of  her  manufactures,  and 
her  system  of  colonial  monopoly,  has  given  such 
additional  value  to  the  labor  of  her  people,  as  greatly 
to  retard  its  fall  of  price  with  the  increase  of  popula 
tion.  But  there  is  a  more  general  and  certain  mode 
of  preventing  the  reduction  of  the  laborer's  wages 
below  the  rate  of  comfortable  subsistence.  This  is 
wrhat  Malthus  calls  the  preventive  or  prudential 
check  to  redundant  numbers,  and  which  he  considers 
is  rather  to  be  wished  than  expected. 

There  is  some  ground  for  the  hope  that  the  high 
standard  of  comfort  which  has  ever  existed  in  the 
United  States  may  prove  a  timely  and  efficient  check 
to  a  redundant  population ;  and  this  gratifying  view 
derives  support  from  that  high  degree  of  self-respect 
which  is  a  natural  consequence  of  our  form  of  govern 
ment,  and  which  is  felt  by  the  humblest  of  our 
citizens. 

A  fact  disclosed  by  the  census  of  1840,  and  con 
firmed  by  that  of  1850,  is  calculated  to  encourage 
those  hopes.  It  shows  a  steady  diminution  of  the 
number  of  children  in  the  United  States  under  ten 


82  POLITICAL     ECONOMY. 

years  of  age,  compared  with  the  women ;  and, 
although  this  result  may  possibly  be  owing  to  a 
greater  mortality  of  the  children,  or  to  less  prolific- 
ness  of  the  women,  yet  neither  of  these  facts  is  to  be 
presumed  without  evidence ;  and  the  most  rational 
explanation  of  the  fact  is  to  suppose  a  short  postpone 
ment  of  the  average  age  at  which  females  marry.  It 
is  for  time  to  show  whether  this  diminution  in  the 
number  of  children  has  been  produced  by  a  change 
of  manners,  which  has  its  limit,  or  by  causes  that 
will  continue  to  act,  so  that  our  population  will  not 
pass,  or  much  exceed,  their  present  high  standard  of 
subsistence. 

In  this  gradual  reduction  of  the  wages  of  labor, 
when  population  is  checked  neither  by  the  self- 
restraining  prudence  of  individuals  nor  by  great 
public  calamities,  what  is  the  lowest  point  to  which 
those  wages  can  descend  without  lessening  the  num 
bers  of  the  community? 

Until  those  numbers  have  reached  the  level  of  the 
means  of  subsistence,  the  lowest  wages  to  which  com 
petition  can  reduce  the  laborer  will  be  enough  to  sup 
port  himself  and  a  family  of  an  average  number  in 
the  ordinary  mode  of  subsistence.  But  when  that 
level  is  reached,  as  in  China,  then  the  limit  may 
descend  still  lower,  until  the  wages  become  barely 
sufficient  to  support  the  laborer  himself.  In  such  a 
community,  incapable  of  further  increase,  the  loss  by 
death  is  repaired  principally  by  the  richer  classes, 


AGRICULTURAL     INDUSTRY.  83 

whose  natural  multiplication  may  be  the  same,  or 
nearly  the  same,  as  where  population  was  thin ;  and 
from  this  stock  the  laboring  class  will  be  ever  receiv- 


, 


ing  fresh  supplies.  It  thus  appears  that,  while  the 
maximum  of  the  wages  of  agricultural  labor  is  all 
the  raw  produce  which  the  laborer  can  make  after 
paying  the  expense  of  cultivation,  but  no  rent,  the 
minimum  is  no  more  than  is  necessary  for  his  sub 
sistence.  At  this  meagre  rate  it  is  believed  that  labor 
can  always  be  procured  in  China,  Hindostan,  and 
other  parts  of  Asia. 

In  treating  of  agricultural  labor,  it  is  proper  to 
notice  Slavery,  which  prevails  in  nearly  one-half  of 
the  States  of  this  Union,  and  which  is  viewed  with 
very  different  sentiments  by  those  two  great  local 
divisions. 

By  one  party  it  is  thus  impugned  :  a  most  obvious 
consequence  of  this  condition  is,  that  where  ordinary 
labor  is  performed  by  slaves,  such  labor,  by  a  natural 
association,  is  regarded  as  beneath  the  dignity  of  free 
men,  and  they  are  consequently  thus  rendered  indo 
lent  and  idle.  Nor  is  this  all :  the  slave,  not  being 
stimulated  to  industry  by  the  expectation  of  receiv 
ing  the  fruits  of  his  own  labor,  is  likely,  from  the 
love  of  ease  so  natural  to  man,  to  work  less  willingly, 
with  less  energy,  and  to  avoid  toil  when  he  can.  To 
counteract  this  propensity,  superintendents  are  neces 
sary,  who  sometimes  resort  to  punishment  to  compel 
that  labor,  which  with  freemen  is  readily  and  volun- 


84  POLITICAL     ECONOMY. 

tarily  exerted  from  self-interest.  The  cost  of  such 
superintendence  is  therefore  a  charge  on  agriculture 
from  which  free  communities  are  exempt ;  and  com 
pulsion,  moreover,  can  scarcely  ever  make  the  labor 
of  a  slave  as  productive  as  that  of  the  free  man. 

The  instinctive  feelings  of  the  slave,  it  is  further 
urged,  also  impel  him  to  extraordinary  expense  and 
waste.  He  is  therefore  generally  thievish,  careless, 
and  improvident.  Slavery  has  thus  been  said  to  con 
sign  one-half  of  the  community  in  the  Southern 
States  to  unwilling  labor,  and  the  other  half  either 
to  idleness,  or,  for  preventing  ennui,  to  vicious 
indulgences. 

Such  are  the  theoretical  objections  to  domestic 
slavery ;  and  yet  there  are  many  facts  which  are  at 
variance  with  this  theory,  so  as  to  compel  those  who 
are  in  pursuit  of  truth  to  make  large  deductions  from 
the  conclusions  to  which  the  mere  speculators  on  this 
subject  have  been  generally  conducted. 

Thus,  as  to  the  unproductiveness  of  slave  labor : 
after  the  emancipation  of  the  slaves  in  the  English 
West  Indies,  the  labor  of  that  class  was  greatly 
diminished,  and  the  confident  predictions  of  the  abo 
litionists  were  completely  falsified,  as  the  products 
of  those  islands,  when  cultivated  by  freemen,  was  far 
less  than  when  cultivated  by  slaves.  In  Jamaica, 
much  the  largest  island,  the  falling  off  was  the  great 
est.  The  negroes,  finding  it  practicable  to  procure 
the  small  patches  of  ground  which,  in  that  genial 


AGRICULTURAL     INDUSTRY.  85 

soil  and  climate,  are  sufficient  for  their  support,  have 
mainly  withdrawn  themselves  from  the  toilsome  and 
irksome  labor  of  making  sugar,  and  can  be  tempted 
to  continue  it  only  by  working  at  high  wages,  a  few 
hours  of  the  day,  and  certain  days  of  the  week ;  so 
that  an  able-bodied  laborer  now  produces  scarce  a 
third  or  a  fourth  of  what  he  formerly  earned  In 
Barbadoes,  indeed,  where  the  population  is  very  dense, 
necessity  compels  the  mass  of  the  negroes  to  work  on 
the  plantations  as  formerly,  and  the  produce  of  this 
island  has  not  diminished,  but  has  even  increased. 
Between  these  extremes  the  other  islands  were  found, 
some  yielding  far  less  than  their  former  product,  and 
others  approaching  it.  Of  late,  by  the  aid  of  the 
Coolies,  whom  the  Government  has  introduced  into 
its  sugar  colonies  at  a  great  expense,  the  present  pro 
duct  of  all  of  them  except  Jamaica  is  equal  to  what 
it  formerly  was. 

In  the  slaveholding  States  of  this  Union  there  are 
some  persons  who,  brought  up  among  slaves,  have 
acquired  so  much  skill  in  managing  them,  that  the 
products  of  their  labor  are  scarcely  inferior  to  those 
of  freemen.  Proprietors  of  this  description  excite 
emulation  among  the  slaves,  and  make  use  of  small 
indulgences  and  rewards  as  incentives  to  their  in 
dustry,  which  are  more  efficient  than  those  of  punish 
ment,  inasmuch  as  the  former  make  them  identify 
their  master's  interest  with  their  own,  and  consider 
themselves,  in  fact,  as  members  of  the  same  patri- 
8 


86  POLITICAL    ECONOMY. 

archal  family.  These  cases  of  the  judicious  and  suc 
cessful  management  of  slaves  are  not,  indeed,  of 
common  occurrence,  but  they  are  sufficient  to  show 
how  much  the  evils  of  slavery  are  capable  of  miti 
gation. 

There  are  also  some  social  benefits  growing  out  of 
this  institution  which  it  is  proper  to  state,  to  pass  for 
what  they  are  worth.  The  habit  of  command,  to 
which  the  master  of  slaves  has  been  familiarized  from 
his  infancy,  peculiarly  fits  him  for  many  of  the  higher 
duties  of  civilized  life.  He  is  thus  likely  to  be  better 
qualified  for  exercising  authority  both  in  the  army 
and  navy,  and  even  in  the  civil  department.  It  is, 
perhaps,  thus  that  the  Southern  States  have  furnished 
more  than  their  proportion  of  those  who  have  held 
the  higher  offices  of  the  government. 

The  institution  seems  to  be  also  favorable  to  man 
ners,  by  giving  that  quiet  ease  which  the  habitual 
self-respect  of  the  slaveholder  is  so  likely  to  bestow; 
so  that  the  manners  of  the  cultivated  classes  in  the 
slaveholding  States  differ  little  or  nothing  from  those 
of  people  of  rank  in  Europe. 

On  the  other  hand,  slavery  has  been  thought  to 
beget  overbearing  manners,  and  to  have  an  unpropi- 
tious  influence  on  the  temper.  This  opinion,  which 
seems  plausible,  was  adopted  by  Mr.  Jefferson,  and 
he  has  given  currency  to  the  hypothesis  by  the  weight 
of  his  authority.  Yet  when  we  find  that  it  is  not 
confirmed  by  the  touchstone  of  fact;  and  that,  if  our 


AGRICULTURAL    INDUSTRY.  87 

public  men  are  regarded  as  fair  specimens  of  the 
population  of  their  respective  States,  those  of  the 
South  may  well  compare  with  those  of  the  North  for 
mildness,  clemency,  and  amenity,  then  we  are  bound 
to  consider  speculative  opinions,  which  are  thus  forci 
bly  opposed,  as  among  the  fallacies  of  ingenious  theory. 
There  could  be  no  better  refutation  of  this  specious 
philosophy  than  Mr.  Jefferson  himself. 

It  may  be  further  remarked  that  since  our  country 
contains  numbers  of  the  African  race,  so  great  as  to 
be  beyond  the  power  of  removal,  and  since  they  are 
universally  regarded  by  the  whites  as  inferior  to 
themselves,  both  physically  and  intellectually,  the 
Southern  States  are  irreconcilably  averse  to  the  eman 
cipation  of  their  slaves.  But,  in  the  meanwhile,  it 
may  be  fairly  questioned  whether  that  portion  of  the 
proscribed  race  who  are  in  bondage  are  not  as  well 
cared  for,  and  in  fact  as  happy,  as  their  brethren  in  the 
Northern  States,  where  they  are  free,  but  where  they 
are  not  treated  with  the  same  easy  familiarity  and  kind 
ness  as  by  Southern  gentlemen,  and  where  the  mutual 
affection  and  good  will  which  often  subsist  between 
the  white  and  the  colored  man  are  unknown. 

These  remarks  are  made,  not  to  show  that  slavery, 
as  some  have  maintained,  is  a  positive  good,  but 
simply  to  indicate  that  here,  as  in  all  human  con 
cerns,  evil  and  good  are  closely  intermingled,  and 
that,  to  come  to  just  conclusions,  we  must  make  a 
fair  estimate  of  both. 


POLITICAL     ECONOMY. 

But  an  important  question  here  presents  itself — 
Is  domestic  slavery  to  be  regarded  as  a  permanent 
institution  in  the  United  States?  To  this  I  do  not 
hesitate  to  return  an  answer  in  the  negative ;  and  to 
assert  that,  as  serfdom,  which  once  existed  in  every 
part  of  Europe,  has  there  universally  disappeared, 
except  in  Russia,  where  it  gives  indications  that 
before  long  it  will  entirely  cease,  it  must,  from  the 
same  general  causes,  also  terminate  in  the  United 
States. 

We  have  seen  that,  in  the  progress  of  society,  after 
the  more  fertile  lands  are  all  occupied,  the  price  of 
labor  will  decline  with  the  increasing  density  of 
population.  Now,  long  before  that  density  has 
reached  its  maximum,  the  price  of  labor  will  have  so 
fallen  that  the  value  of  a  slave  will  not  repay  the 
cost  of  rearing  him ;  in  which  case,  slavery,  no  longer 
profitable  to  the  master,  will  naturally  expire. 

The  large  extent  of  fertile  lands  in  the  United 
States  still  unoccupied,  together  with  the  present 
thinness  of  their  population,  may  at  first  lead  to  the 
supposition  that  the  period  adverted  to,  when  our 
lands  will  be  less  able  to  furnish  an  easy  subsistence 
to  the  people,  is  removed  to  an  indefinite  distance  — 
not  less  than  several  centuries.  An  easy  calculation 
will,  however,  lead  us  to  a  very  different  result. 
Supposing  our  present  population  to  be  30,000,000 — 
and  it  is  probably  more ;  then  in  three  duplications 
it  will  be  (30  x  2  =  60  x  2  =  120  x  2  =)  240,000,000 ; 


AGRICULTURAL     INDUSTRY.  89 

which  would  give  for  our  whole  territory  an  average 
population  of  seventy  to  the  square  mile. 

The  average  period  of  our  doubling  during  the 
seventy  years  from  1790  to  1850  was  less  than 
twenty-four  years.  Let  us,  however,  suppose  that 
the  first  period  from  this  time  would  be  twenty-five 
years,  the  second  twenty-six  years,  and  the  third 
twenty-seven  years  —  making,  in  all,  seventy-eight 
years,  to  the  year  1937,  when  our  numbers  would  be 
240,000,000. 

Though  we  have  no  certain  and  precise  data  for 
determining  at  what  degree  of  density  the  value  of 
slaves  would  not  repay  the  cost  of  rearing  them,  yet 
it  seems  probable,  from  the  condition  of  Europe 
when  villainage  there  terminated,*  that  a  density 
much  less  than  seventy  to  the  square  mile  is  incon 
sistent  with  slavery.  But  should  even  a  greater 
density  be  assumed  as  the  limit,  that  limit,  by  the 

In  1843,  in  a  work  on  the  census,  I  hazarded  the  opinion, 
founded  on  such  imperfect  information  as  I  possessed,  that,  in  a 
period  of  from  about  sixty  to  eighty  years,  slavery  would  pro 
bably  expire  in  the  United  States.  They  soon  afterwards 
obtained  an  accession  of  territory  of  more  than  800,000  square 
miles  (Texas  and  part  of  Mexico),  which,  by  lessening  the 
density  of  population,  would  postpone  the  period.  It  would 
not,  however,  put  it  off  for  more  than  ten  years;  and,  on  a  revision 
of  the  views  then  taken,  I  see  no  reason  to  change  them,  and 
still  think  that,  in  less  than  a  hundred  years  from  that  time, 
slavery  will,  in  all,  or  nearly  all,  of  the  States,  die  a  natural  and 
an  easy  death. 


90  POLITICAL     ECONOMY. 

uncontrollable  laws  of  human   multiplication,  must 
be  eventually  reached. 

The  subsequent  rise  in  the  price  of  slaves  has 
strangely  seemed  to  some  a  contradiction  to  the 
hypothesis  of  the  spontaneous  termination  of  slavery. 
But  there  is  no  inconsistency  in  the  two  facts.  The 
price  of  slaves  is  high  in  consequence  of  the  profits 
of  their  labor  in  making  cotton,  and  of  the  peculiar 
fitness  of  the  soil  and  climate  of  the  Southern  States 
for  the  culture  of  that  commodity ;  and  so  long  as 
the  supply  does  not  exceed  the  demand,  the  prices 
both  of  cotton  and  slaves  must  continue  high.  But 
those  prices  must  be  seriously  affected  by  the  further 
increase  of  slaves.  By  the  census  of  1850,  their 
number  exceeded  3,000,000.  It  is  probably  now 
near  4,000,000  ;  but  whatever  it  may  be,  in  twenty- 
five  years  it  will  have  doubled,  in  fifty  years  have 
quadrupled,  and  of  course  be  able  to  produce  four 
times  as  much  cotton,  tobacco,  and  other  agricultural 
produce  as  at  present.  But  in  that  time  the  con 
sumers  of  cotton  and  tobacco  in  Europe  and  this 
country  will  not  have  doubled,  and  consequently  the 
supply  will  be  proportionally  reduced.  There  will 
be  no  reason  at  that  period  why  the  making  of  cotton 
should  be  better  rewarded  than  any  other  agricul 
tural  labor — the  price  of  which  will  have  undergone, 
from  its  increased  supply,  a  general  fall,  and  a  part 
of  it  be  compelled  to  seek  employment  in  manufac 
tures,  as  has  been  previously  explained. 


AGRICULTURAL    INDUSTRY.  91 

Let  us  now  glance  at  some  of  the  diversities  of 
human  labor  in  different  countries.     Man,  ever  com 
pelled  to  more  or  less  exertion  for  his  subsistence,  is 
no  where  so  industrious  as  in  the  Temperate  Zones. 
There,  work  is  often  a  pleasure  as  well  as  a  business ; 
and  active  exercise,  both  of  body  and  mind,  is  a  want 
of  his  nature.     In  the  polar  regions  he  cannot  always 
endure  the  intense  cold,  and,  in  the   season  when 
he  can  work,  he  has  a  very  limited  field  for  profitable 
employment.     The  chilled  earth  makes  no  return  to 
the  husbandman,  and  the  inhabitant  has  little  occu 
pation  but  in  the  precarious  toils  of  the  hunter  or 
fisherman.     In  the  Torrid  Zone,  where  the  soil,  under 
a  heat  that  never  intermits,  is  most  prolific,  labor  is 
peculiarly  irksome,  and  is  fortunately  little  needed. 
There,  too,  man  is  less  disposed  to  consume  animal 
food,  the  more  expensive  species  of  aliment;  and  the 
bounty  of  nature  furnishes  so  ample  a  store  from  the 
vegetable  kingdom,  that  he  can  subsist  upon  the  pro 
duct  of  one-fourth,  or  even  less,  of  the  area  required 
to  support  him  in  the  Temperate  Zones. 

Besides  these  effects  of  climate  on  human  labor, 
moral  causes  have  also  much  influence.  One  of  the 
most  potent  of  these  influences  is  that  of  government. 
Where  the  righis  of  property  are  accurately  defined 
and  efficiently  protected,  as  they  are  in  free  countries, 
there  men  are  likely  to  be  industrious  from  the  ex 
pectation  of  enjoying  the  fruits  of  their  industry. 
This  is  the  case  in  the  United  States,  in  England, 


92  POLITICAL     ECONOMY. 

and,  in  a  less  degree,  in  most  other  parts  of  Europe. 
But  where  a  despotic  and  rapacious  government 
appropriates  to  its  own  purposes  most  of  the  earnings 
of  the  people,  there  less  will  be  produced,  and  the 
product  will  be  less  economically  used.  Such  is  the 
condition  of  nearly  all  the  countries  of  Asia ;  yet  the 
pressing  wants  of  the  dense  numbers  of  China  force 
the  people  there  to  a  high  degree  of  industry,  by 
which  the  evils  of  an  over-crowded  population  are 
greatly  mitigated. 

In  Spain,  Portugal,  and  Italy,  the  people  are  far 
less  industrious  than  they  are  in  England,  France, 
and  Germany.  This  inferiority  may  be  in  part 
ascribed  to  the  difference  of  climate,  and  partly  to 
the  difference  in  the  amount  of  civil  freedom. 

Education  also  here  exerts  a  benignant  influence. 
It  tends  to  make  men  more  moral  and  provident,  and 
less  prone  to  idleness  and  intemperance.  The  general 
diffusion  of  mental  instruction  throughout  New  Eng 
land  has  doubtless  contributed  to  the  great  and  diver 
sified  industry  which  characterizes  the  people  of  that 
part  of  the  Union. 

It  is  by  agricultural  industry  that  much  the  larger 
part  of  raw  produce  is  furnished.  From  this  source 
is  derived  the  principal  portion  of  human  aliment, 
both  vegetable  and  animal.  Wheat,  maize,  rice,  rye, 
barley,  buckwheat ;  every  kind  of  pulse  and  potatoes, 
and  other  roots ;  beef,  mutton,  pork,  and  every  species 
of  poultry;  wool,  skins,  and  hides;  cotton,  hemp,  flax, 


AGRICULTURAL    INDUSTRY.  93 

and  tobacco  ;  indigo,  and  other  dye-stuffs.  But  large 
supplies  are  also  furnished  from  mines,  as  coal,  the 
ores  of  metals,  marble,  stone,  and  other  minerals. 
The  ocean,  rivers,  and  lakes,  likewise  contribute 
their  portion  in  fish  and  fish-oil,  oysters,  and  other 
shell-fish. 

In  addition  to  the  before-mentioned  species  of  raw 
produce,  there  are  many  commodities  important  to 
human  comfort,  and  extensively  consumed,  which 
are  equally  the  product  of  agricultural  industry  and 
of  that  which  we  are  about  to  consider. 


CHAPTER   IX. 

MANUFACTURING   INDUSTRY. 

OF  the  three  great  employments  of  national  indus 
try,  that  of  giving  to  raw  produce  the  forms  adapted 
to  the  purposes  of  man,  or  of  manufactures,  requires 
the  most  manual  adroitness.  In  this  talent  there  is 
a  great  diversity  among  individuals,  so  that  some  are 
able  to  do  as  much  in  an  hour  as  others  can  in 
twice  or  thrice  the  time,  and  not  seldom  perform  ope 
rations  to  which  most  others  are  incompetent.  There 
is,  indeed,  in  every  mechanical  employment,  as  in  the 
nicer  productions  of  art,  as  great  a  difference  in  the 
goodness  of  the  work,  as  in  the  celerity  with  which  it 
has  been  produced.  Hence,  some  acquire  reputation 
as  bootmakers,  tailors,  hatters,  or  as  makers  of  fine 
cutlery,  cabinet-work,  watches,  or  jewelry.  Even  in 
the  simple  operations  of  making  nails  or  bricks,  the 
labor  of  some  is  twice  as  efficient  as  that  of  others. 

But  the  greatest  advantage  possessed  by  manufac 
tures  in  the  employment  of  labor  is,  that  they  admit 
the  co-operation  of  several  individuals  in  the  same 
object,  by  which  the  product  is  so  greatly  multiplied. 
This  was  first  noticed  by  Adam  Smith,  under  the 
designation  of  the  "division  of  labor,"  and  was 

(94) 


MANUFACTURING    INDUSTRY.  95 

strikingly  illustrated  by  him  in  the  manufacture  of 
pins.  If  one  person  was  to  perform  all  the  opera 
tions  required  for  the  fabrication  of  this  little  imple 
ment,  he  could  not  make  twenty  pins  in  a  day — 
perhaps  not  more  than  one ;  but  by  distributing  these 
several  operations  among  a  dozen  or  twenty  workmen, 
the  proportional  number  to  each  one  would  be  up 
wards  of  4000  pins  in  a  day. 

This  prodigious  gain  is  referred  by  Smith  to  three 
circumstances  :  the  increased  adroitness  and  rapidity 
of  execution  acquired  in  the  performance  of  a  single 
act ;  the  saving  of  time  which  would  be  lost  when  a 
workman  passes  from  one  operation  to  another,  which 
perchance  is  to  be  executed  in  another  place,  as  well 
as  with  other  tools;  and  lastly,  machinery  may  be 
more  extensively  substituted  for  human  labor  in  pro 
portion  as  the  operation  is  more  simple. 

The  gain  from  the  last-mentioned  source  may  be 
illustrated  by  some  striking  examples.  The  machine 
which  makes  wool  or  cotton  cards  has  saved  an  im 
mense  amount  of  human  labor,  that  was  previously 
expended  in  forming  its  little  wire-hooks,  one  by  one, 
and,  by  the  same  slow  process,  inserting  them  in  a 
piece  of  leather  perforated  to  receive  each  hook.  At 
present,  the  machine  cuts  the  wire  to  a  proper  length ; 
bends  it  into  a  hook ;  perforates  the  leather  —  at  the 
same  time  inserting  the  hook,  until  the  card  is  com 
plete.  All  this  occupies  so  little  time,  that  the  card 


96  POLITICAL    ECONOMY. 

is  then  sold  for  a  small  part  of  what  it  had  formerly 
cost. 

But  of  all  labor-saving  machines,  the  cotton-gin, 
in  a  national  point  of  view,  is  the  most  important. 
Before  it  was  invented,  the  seed  of  that  species  of 
cotton  which  can  alone  be  cultivated  in  the  interior 
portion  of  the  United  States,  was  separated  from  the 
fibrous  part  by  the  human  fingers ;  by  which  opera 
tion  one  person  could  clean  not  more  than  a  pound  a 
day.  Thus  furnished  in  such  small  quantity,  it  was 
valueless  as  an  export,  and  was  used  only  to  a  mode 
rate  extent  for  manufactures  in  the  Southern  States. 
But  after  Whitney's  invention  of  the  saw-gin  —  a 
combination  of  circular  saws  and  brushes,  the  sim 
plest  moving-power — -a  small  stream,  or  a  horse,  was 
made  to  perform  this  work  at  an  insignificant  expense, 
so  as  to  render  cotton  a  general  article  of  culture, 
where  the  climate  permitted  its  growth,  until  it  be 
came  an  export  of  more  value  than  that  of  all  other 
commodities  combined. 

The  manufacture  of  cotton  into  cloth  has  received 
improvement  as  great  as  has  the  production  of  the 
raw  material.  The  inventions  which  have  been  made 
in  England  for  carding,  spinning,  and  weaving  cotton 
by  machinery,  have  so  facilitated  the  manufacture  of 
this  material,  that  they  have  contributed  as  much  as 
the  cotton-gin  to  the  cheapness  of  its  fabrics ;  and, 
by  their  joint  operation,  a  large  proportion  of  those 
fabrics  now  sell  for  one-sixth  or  one-eighth  part  of 


MANUFACTURING     INDUSTRY,  97 

their  former  cost.  All  the  operations  of  manufac 
turing  cotton-cloth,  which  were  once  performed  by 
human  hands,  are  now  done,  and  better  done,  by  ma 
chines,  which  are  put  in  motion  by  running  water,  or 
steam,  or  horses ;  and  the  consumption  has  been  so 
extended  by  its  cheapness,  that  it  now  gives  profitable 
employment  to  a  far  greater  number  of  persons  than 
ever. 

The  machinery  which  has  so  lessened  the  cost  of 
cotton  fabrics  has  been  also  applied  to  those  of  wool 
and  of  linen,  but  not  to  the  same  extent,  nor  with 
the  same  advantage. 

When,  in  political  economy,  labor  is  considered  to 
be  of  uniform  value,  it  refers  only  to  labor  in  its 
simplest  form  —  that  of  an  ordinary  man,  exercised 
with  ordinary  skill.  But  in  truth,  there  is  no  mer 
chantable  commodity  which  varies  in  value  more 
than  human  labor;  and  it  is  proper  to  notice  the 
sources  of  this  diversity. 

First.  The  difference  of  skill  which  an  employ 
ment  may  require.  The  superiority  may  consist 
either  in  manual  dexterity,  as  in  the  case  of  a  me 
chanic,  or  in  professional  knowledge,  as  in  the  case 
of  a  lawyer  or  physician,  or  of  both  united,  as  in  the 
case  of  a  surgeon.;  and  it  is  immaterial  whether  the 
skill  be  the  result  of  previous  instruction,  or  the 
endowment  of  nature. 

In  many  branches  of  industry,  the  most  toilsome 
portions  of  the  labor  expended  are  of  the  cheapest 
9  G 


98  POLITICAL     ECONOMY. 

kind,  while  another  portion,  requiring  extraordinary 
skill,  finds  its  remuneration  only  in  a  very  high  price. 
Thus  the  first  preparation  of  a  piece  of  marble  for  a 
statue  may  be  performed  by  an  ordinary  stone-cutter, 
at  the  low  wages  of  common  labor ;  but  the  last  part 
of  the  process  of  making  such  intractable  material 
closely  copy  the  diversified  forms  of  animal  life  may 
command  twenty,  or  even  fifty  times  as  much  remu 
neration.  So  of  the  finest  piece  of  work  in  watch 
making,  and  the  manufacture  of  plate  or  jewelry. 

Secondly.  The  price  of  labor  varies,  also,  according 
to  the  greater  or  less  agreeableness  of  the  operation. 
In  the  same  degree  that  an  employment  is  distaste 
ful,  its  compensation  must  be  higher,  to  counter 
balance  the  disadvantage.  Hence  the  office  of  an 
executioner,  which  is  naturally  revolting  to  the  feel 
ings,  and  is  therefore  held  in  great  aversion  or  con 
tempt,  is  commonly  very  well  rewarded.  This  odium 
has  probably  suggested  those  machines  which  have 
been  devised  to  execute  the  dread  sentence  of  the 
law  without  the  visible  agency  of  man,  as  the  maiden 
in  Scotland,  and  the  guillotine  in  France.  The  busi 
ness  of  negro-trading  is  also  one  which  is  generally 
odious,  as  violating  the  dictates  of  humanity,  and  as 
implying  a  want  of  human  sympathy.  To  compen 
sate  this  unpopularity,  the  trade  is  very  profitable. 
The  great  gains  of  the  African  slave  trade  long 
avowedly  prevented  its  abolition  by  the  British  Go 
vernment.  Even  now  they  are  often  sufficient  to  defy 


MANUFACTURING     INDUSTRY.  99 

the  hostility  of  the  principal  maritime  powers  of  the 
world. 

There  are  some  trades  which  are  held  by  popular 
sentiment  in  disrespect,  as  requiring  less  manly  quail 
ties,  or  as  subjecting  their  followers  to  menial  services; 
such  are  those  of  barbers  and  tailors.  The  profits 
of  their  labor,  which  is  comparatively  light,  are  en 
hanced  by  these  disparaging  circumstances.  On  the 
other  hand,  the  occupation  of  a  soldier,  which  is  often 
one  of  toil,  and  always  one  of  danger,  has  commonly 
but  a  small  pecuniary  reward ;  but  the  honor  and 
glory  associated  with  this  employment  constitute  u 
part  of  its  remuneration. 

The  small  compensation  which  clerical  men  often 
receive  arises  partly  from  the  high  respect  in  which 
their  profession  is  held,  and  partly  from  the  influence 
which  it  gives  to  clergymen  over  the  minds  of  so 
many  of  their  respective  congregations.  A  similar 
regard  to  honor  and  power  often  induces  a  lawyer  to 
accept  the  office  of  a  judge,  with  a  salary  of  less  than 
half  of  his  former  professional  gains,  though  the 
lighter  labors  of  his  new  occupation  may  have  also 
exerted  some  influence.  We  see  the  same  principle 
operating  on  militia  offices,  in  which  there  is  gene 
rally  not  only  no  emolument  received,  but  a  certain 
expense  incurred,  in  the  purchase  of  an  uniform, 
epaulettes,  and  other  trappings  of  office. 

In  countries  in  which  there  is  a  privileged  class, 
the  honor  of  belonging  to  it  is  deemed  a  very  high 


100  POLITICAL     ECONOMY. 

reward.  The  rank  of  a  peer,  in  monarehial  coun 
tries,  and  even  that  which  is  merely  personal,  as  the 
post  of  a  knight  of  the  garter,  are  by  many  esti 
mated  beyond  a  large  pecuniary  pension.  James  II. 
raised  a  considerable  sum  of  money  by  appealing  to 
this  desire  of  distinction  in  the  sale  of  baronetcies. 
The  sum  paid  for  the  honor  was  about  $5000 — equi 
valent,  in  the  scale  of  wealth,  to  more  than  $10,000 
at  the  present  day. 

Some  occupations  receive  higher  rewards  in  conse 
quence  of  the  dangers  to  which  they  are  exposed. 
Thus  those  who  work  in  mines,  from  the  dreadful 
explosions  that  there  occasionally  occur,  receive  high 
wages.  So  do  those  who  are  employed  in  working 
steam-engines.  The  compensation  to  ordinary  sea 
men  would  also  be  augmented  by  its  dangers  as  well 
as  its  hardships,  if  their  occupation  were  not  attractive 
to  the  young  and  adventurous  by  reason  of  those 
very  dangers ;  and  if  it  were  not  afterwards  pursued 
by  the  force  of  habit,  and  because  the  seafaring  life 
in  a  great  measure  unfits  its  followers  for  other 
employments. 

Thirdly.  The  moral  qualities  required  for  the  com 
petent  discharge  of  some  employments  have  an  influ 
ence  on  their  compensation.  "Wherever  integrity  is 
essential  to  the  faithful  exercise  of  their  duties,  the 
remuneration  is  proportionally  high.  Hence  the 
liberal  pay  which  is  given  to  public  functionaries, 
according  to  their  responsibility,  and  the  confidence 


MAXUF  AC  TURING    INDUSTRY.  101 

reposed  in  them.  So  of  those  who  are  entrusted  with 
the  safekeeping  of  money.  The  frequent  instances 
which  have  occurred  in  our  country  of  abuses  of  such 
trusts,  by  bank-officers  and  others,  seems  to  show 
that  the  rewards  paid  to  honesty  have  been  below 
the  standard  which  justice  and  policy  would  pre 
scribe/'11 

The  effect  of  moral  qualities  in  raising  the  pay  of 
services  which  confer  no  special  honor,  is  seen  in  the 
remuneration  received  by  superintendents  arid  over 
seers.  As  the  value  of  their  services  depends  mainly 
on  an  unremitting  circumspection,  and  a  close  as  well 
as  honest  attention  to  little  things,  which  qualities 
are  found  by  experience  to  be  rare,  they  are  propor 
tionally  well  rewarded ;  and  one  overseer  of  a  planta 
tion  or  farm  can  as  easily  obtain  a  salary  of  $800, 
or  even  $1000,  as  another  can  obtain  one  of  $200. 

Fourthly.  The  irregularity  or  unsteadiness  of  an 
employment  tends  to  raise  its  remuneration.  When 
a  trade  can  be  carried  on  only  at  particular  seasons, 
its  wages  must  be  sufficient  to  compensate  for  the 
time  unemployed.  Thus  a  bricklayer,  or  plasterer, 
who  cannot  work  in  very  cold  weather,  must  have 

*  It  was  a  memorable  saying  of  a  former  Treasurer  of  Virginia, 
on  resigning  his  office,  that  "  he  trusted  he  had  quitted  it  with 
clean  hands,  as  he  certainly  did  with  empty  ones."  He  was  in 
deed  of  unimpeachable  integrity,  but  his  last  remark  took  away 
much  of  the  merit  claimed  by  the  first,  since  it  is  only  full  hands 
which,  on  such  occasions,  are  likely  to  be  soiled. 


102  POLITICAL    EC  0X0  MY. 

higher  wages  than  a  carpenter,  who  can  work  at  all 
seasons.  Hence,  their  pay,  which  may  be  different 
by  the  day,  may  be  the  same  in  the  year.  The 
labors  of  some  professional  men  are  doubtless  better 
rewarded  for  the  time  they  are  unemployed.  The 
same  circumstances  increase  the  remuneration  of 
undertakers,  musicians,  and  of  all  whose  services  are 
required  only  on  rare  occasions. 

Fifthly.  The  probability  or  improbability  of  success 
in  an  employment  has  a  proportional  effect  on  its 
rewards.  In  some  trades,  which  at  once  minister  to 
the  ordinary  wants  of  mankind,  and  are  of  easy  ac 
quisition,  an  ordinary  degree  of  industry  is  certain  to 
be  successful.  But  where  they  minister  to  the  wants 
of  only  a  fewr,  or  require  peculiar  talents,  failure  is 
more  common  than  success,  and  the  rewards  of  the 
small  number  who  are  successful  are  the  greater  from 
the  diminution  of  the  competitors.  Hence  the  high 
remuneration  which  is  occasionally  received  by  some 
lawyers,  physicians,  and  surgeons.  The  prizes  which 
they  have  drawn  in  the  lottery  of  life  may  be  nearly 
equal  to  the  losses  of  those  who  have  failed. 

But  they  are  probably  never  quite  equal.  It  has 
been  observed  that  the  uncertainty  of  success  in  any 
sort  of  business  or  employment,  though  it  does  en 
hance  its  remuneration  in  the  way  just  mentioned, 
commonly  does  so  to  a  less  extent  than  that  to  which 
it  seems  to  be  justly  entitled.  The  reason  is  that  the 
occasional  high  rewards — like  high  prizes  which  have 


MANUFACTURING  INDUSTRY.      103 

been  drawn  in  lotteries — have  more  effect  in  attract 
ing  competitors  than  the  failures  have  in  lessening 
their  number.  The  extraordinary  gains  now  and 
then  made  in  a  new  branch  of  commerce,  are  sure  to 
be  followed  by  others  with  a  reckless  eagerness  which 
often  terminates  in  bankruptcy  and  ruin.  The  large 
income  obtained  by  one  lawyer  or  physician  out  of 
fifty,  is  thus  a  main  cause  of  these  professions  being 
so  over-stocked. 

All  these  facts  show  the  undue  predominance  of 
hope  in  our  estimates  of  the  future.  Wherever,  then, 
the  profits  of  an  employment  are  occasionally  large, 
but  precarious,  they  are  certain  to  be  over-rated,  and 
consequently  to  be  over-crowded  with  competitors ; 
while,  on  the  other  hand,  those  occupations  in  which 
the  gains  are  gradual  and  moderate,  are  more  certain, 
and  above  the  general  average.  Hence  it  is  that 
there  is  a  larger  proportion  of  fortunes  made,  and 
fewer  failures,  in  the  business  of  a  butcher,  baker, 
tanner,  or  grocer,  than  in  that  of  a  great  ship-owner, 
or  merchant,  engaged  in  foreign  commerce. 

In  all  these  modifications  of  the  rewards  of  labor, 
we  see  the  governing  influence  of  the  law  of  supply 
and  demand ;  and  that  every  circumstance  which  has 
been  mentioned  as  either  increasing  or  diminishing 
those  rewards,  has  done  so  by  lessening  or  augmenting 
the  supply  of  labor  required,  and  thus  affecting  the 
demand,  or  number  of  competitors. 


104  POLITICAL    ECONOMY. 

Sixthly.  The  five  preceding  modes  of  influencing 
the  price  of  labor  are  substantially  those  laid  down 
by  Adam  Smith,  who  first  introduced  them  to  the 
notice  of  the  political  economist.  But  there  is  yet 
another,  in  which  the  anomalous  reward  received  for 
labor  falls  under  neither  of  those  five  classes,  and 
which  can  be  referred  only  to  custom.  Thus,  in  the 
State  of  Maryland,  it  is  usual  to  give  large  gratuitous 
fees  to  the  clerk  who  issues  marriage-licenses,  while, 
in  most  of  the  States,  extra  fees  are  given  on  such 
occasions  only  to  the  officiating  clergyman.  In  the 
city  of  Washington,  it  is  the  usage,  on  the  death  of  a 
member  of  Congress,  for  each  hackney-coach  in  the 
city  to  attend  the  funeral  procession,  for  which  ser 
vice,  instead  of  the  ordinary  fare  of  fifty  cents,  five 
dollars  is  always  paid.  There  are  also  settled  fees 
for  certain  professional  services,  which  are  commonly 
very  disproportionate  to  the  time  and  skill  exerted. 
As  these  rewards  of  labor  exceed  the  ordinary  ave 
rage,  they  naturally  tend  to  increase  the  number  of 
competitors,  and,  by  a  correspondent  lessening  of 
profits,  restore  the  just  equilibrium  between  wages 
and  labor. 

In  all  manufactures  there  are  three  elements  which 
combine  to  determine  the  market  value  of  the 
finished  fabric.  These  are  the  raw  material,  the 
labor,  and  the  machinery ;  and  they  occupy  very  dif 
ferent  proportions  in  different  species  of  manufac- 


MANUFACTURING     INDUSTRY.  105 

tures.  Thus,  in  cotton  fabrics,  in  which  the  labor  is 
performed  chiefly  by  machinery,  and  is,  consequently, 
cheaper,  the  raw  material  is  by  much  the  most  valu 
able  part. 

In  those  of  wool,  the  raw  material  is  also  the  most 
costly,  but  the  value  of  the  labor  and  machinery 
expended  approaches  that  of  the  raw  material. 

In  those  of  iron,  there  is  a  very  great  diversity, 
according  to  the  character  of  the  fabric.  In  small 
articles,  such  as  needles,  watch-springs,  and  the  like, 
the  cost  of  the  raw  material  is  insignificant ;  but  in 
anchors,  pieces  of  ordnance,  and  the  iron  bars  of  a 
railway,  it  exceeds  that  of  the  labor  and  machinery. 

In  manufactures  of  leather,  the  value  of  the  labor 
and  of  the  raw  material  are  generally  nearly  equal. 

In  silk  manufactures,  the  material,  which  is  itself 
the  result  of  much  human  labor  and  manipulation, 
is  always  an  important  element;  but  in  its  most 
costly  fabrics,  labor  is  by  far  the  largest  element,  as 
in  the  Gobelin  tapestry,  velvets,  and  rich  brocades. 

In  all  manufactures  of  pottery  and  glass,  the  raw 
material  is  of  little  value,  except  in  making  porce 
lain  ;  when  the  kaolin  earth,  which  is  found  in  few 
places,  is  brought  from  a  great  distance.  There  is  a 
vein  of  this  material  extending  through  the  States 
of  Delaware,  Maryland,  and  Virginia,  which  will 
doubtless  one  day  give  rise  to  extensive  factories  of 
its  beautiful  wares. 


106  POLITICAL    ECONOMY. 

In  the  manufacture  of  books,  the  cost  of  the  prin 
cipal  material,  paper,  is  proportionally  small ;  but  the 
paper  itself  has  been  fabricated  of  old  rags,  some 
pounds  of  which,  costing  but  a  few  cents,  when  con 
verted  into  a  book,  may  sell,  in  consequence  of  the 
labor  bestowed  on  it,  for  as  many  dollars.  The  very 
coarse  paper  made  of  oakum,  or  old  hempen  rope, 
is  manufactured  into  various  articles  of  papier  mache 
of  great  beauty  and  cost. 

But  it  will  be  no  long  time  before  the  United 
States  must  of  necessity  fabricate  its  own  manufac 
tures.  They  cannot  always  derive  their  chief  sup 
plies,  as  at  present,  from  foreign  countries. 

Commerce,  we  know,  is  an  exchange  of  equiva 
lents —  of  domestic  for  foreign  products.  Such  an 
exchange  is  indispensable  to  its  existence.  At  pre 
sent,  we  obtain  all  our  fine  manufactures,  and  part 
of  the  coarse  ones,  in  return  for  our  agricultural  pro 
ducts  sent  abroad.  But  this  commerce  will  be  greatly 
modified  by  our  increase  of  population.  Our  present 
numbers  are  30,000,000 ;  which,  in  fifty  years,  by 
two  duplications,  will  be  120,000,000.  They  will 
consequently  then  need  manufactures  to  four  times 
their  present  amount,  which  will  require  a  corre 
spondent  increase  of  our  exports. 

It  may  doubtless  be  perfectly  competent  for  the 
workshops  of  Europe  to  furnish  this  fourfold  supply, 
but  how  is  it  to  be  paid  for  ?  Will  Europe  be  then 


MANUFACTURING    INDUSTRY.  107 

able  to  purchase  four  times  as  much  cotton,  and 
tobacco,  and  other  products  of  our  agriculture  ?  That 
is  not  to  be  supposed.  The  consumption  of  cotton 
seems,  of  all  those  products,  to  be  the  most  sus 
ceptible  of  a  great  increase ;  and  yet  it  would  seem 
extravagant  to  estimate  the  increased  consumption  at 
one  hundred  per  cent.  But,  admitting  this  twofold 
increase,  we  could  obtain  in  this  way  only  half  of 
our  required  supply  of  manufactures,  and  employ 
only  half  the  proportion  of  our  agricultural  labor 
that  is  employed  at  present,  since  cotton  and  tobacco 
will  not  be  made  beyond  the  existing  market  for 
them.  The  labor  thus  spared  from  agriculture  will 
naturally  be  employed  to  meet  the  increased  demand 
for  manufactures.  Commerce  being  no  longer  able 
to  furnish  these  in  sufficiency,  we  shall  manufacture 
for  ourselves. 

The  change  here  adverted  to  will  be  gradual. 
But  even  in  twenty-four  or  twenty-five  years, 
when  our  demands  for  manufactures  will  have 
doubled,  the  foreign  market  for  our  agricultural 
products  may  have  increased  in  a  much  smaller  pro 
portion,  by  reason  of  the  moderate  increase  of  th.e 
population  of  Europe  in  that  time,  and  consequently 
a  part  of  the  labor  now  employed  in  agriculture  will 
have  been  even  then  diverted  to  manufactures. 

There  are  several  commodities  of  great  utility  and 
extensive  consumption  which  have  equal  claims  to 


108  POLITICAL    ECONOMY. 

be  regarded  as  raw  produce,  and  as  the  product  of 
manufacturing  industry.  Of  this  character  is  sugar, 
whether  made  from  the  cane,  the  beet,  or  the  maple. 
So  of  every  kind  of  wine,  of  cider,  of  butter  and 
cheese,  and  vegetable  oils.  Salt  is  also  as  much  a 
product  of  mining  as  of  manufacturing  industry,  as  is 
also  bar-iron,  and  other  metallic  products. 


CHAPTER   X. 

COMMERCIAL   INDUSTRY. 

DIFFERENT  countries,  in  consequence  of  diversities 
of  climate  or  soil,  produce  useful  articles  in  peculiar 
abundance  and  cheapness ;  and  occasionally  produce 
commodities  that  some  regions  cannot  produce  at  all. 
Thus  we  get  tea  from  China;  coffee  from  Hayti, 
Brazil,  or  Arabia ;  wine  from  France,  Spain,  Portu 
gal,  or  their  colonies.  There  is  a  similar  diversity  in 
the  products  of  human  labor.  We  obtain  our  cutlery, 
hardware,  and  most  of  our  woollens,  from  England; 
our  silks  from  France  and  China;  our  linen  from 
Germany  and  Ireland.  In  our  own  country,  tobacco, 
cotton,  timber,  and  naval  stores,  are  more  abundant 
and  cheap  than  in  any  other.  Every  country,  then, 
by  exchanging  those  commodities  which  are  there 
cheapest  for  those  which  are  dearer,  as  it  may  do  by 
its  foreign  traffic,  is  a  gainer  —  and  hence  are  the 
profits  of  COMMERCE. 

Thus,  in  Turks  Island,  where,  in  consequence  of  a 
dry  climate  and  hot  sun,  salt  is  made  from  sea-water 
by  natural  evaporation,  it  is  so  cheap  that  from  five 
to  ten  bushels  of  it  are  equal  in  value  to  only  one 
bushel  of  Indian  corn ;  and  there  are  many  parts  of 
10  (109) 


110  POLITICAL    ECONOMY. 

the  United  States  in  which  a  bushel  of  salt  has  the 
value  of  four  or  five  bushels  of  corn.  So  in  the  West 
Indies,  an  hundred  pounds  of  flour  will  often  be  of 
equal  value  with  two  hundred  pounds  of  sugar;  while 
in  this  country,  an  hundred  pounds  of  sugar  may  be 
equivalent  to  two  hundred  pounds  of  flour.  By  an 
exchange,  then,  of  the  salt  for  the  corn,  in  one  case, 
or  the  flour  for  the  sugar,  in  the  other,  each  country 
obtains  the  dearer  foreign  commodity  in  return  for 
its  own  cheaper  product;  which  exchange  commonly 
affords  to  both  parties  a  fair  return,  and  sometimes  a 
very  liberal  one,  for  the  trouble  and  expense  of  the 
transportation. 

As  this  expense  of  carriage  is  the  principal  cause 
of  the  different  values  which  the  same  article  bears 
in  different  places,  whatever  facilitates  and  cheapens 
the  cost  of  transport,  in  the  same  degree  adds  to  the 
productiveness  of  the  national  industry.  Hence  the 
importance  of  shipping  for  commerce  with  distant 
countries,  and  of  canals  and  railroads  for  domestic 
commerce.  If,  for  instance,  the  transport  of  a  ton  to 
a  given  distance,  by  any  one  of  these  modes,  was  a 
dollar,  and,  by  some  improvement,  the  cost  could  be 
reduced  one-half,  then  of  course  there  would  be,  on 
all  commodities  transported  that  distance,  fifty  cents 
saved  to  the  producers  or  consumers,  and  which  would 
commonly  be  divided  between  them. 

Improvements  in  transportation  enlarge  the  sphere 
of  the  market,  as  well  as  better  that  which  previously 


COMMERCIAL     INDUSTRY.  Ill 

existed.  Thus,  in  the  case  supposed  (the  reduction 
of  the  cost  of  carriage  from  a  dollar  to  fifty  cents), 
the  field  of  transport,  and  consequently  of  traffic,  may 
be  extended  twice  as  far,  and  obtain  the  benefit  of 
all  the  additional  markets  comprehended  within  the 
greater  distance. 

We  have  a  ready  illustration  of  the  contributions 
of  commerce  to  our  comforts  in  an  ordinary  breakfast. 
The  table  is  probably  made  of  mahogany  brought 
from  Hayti  or  Honduras.  The  cloth  which  covers 
it,  or  the  napkins,  were  the  product  of  Ireland  or 
Germany.  The  tea  came  from  China ;  the  coifee  from 
Batavia,  or  Brazil ;  the  sugar  from  the  West  Indies, 
or  Louisiana ;  the  knives  from  England,  with  handles 
of  ivory  from  Africa ;  the  spoons  and  forks,  and  other 
articles  of  silver,  from  Mexico ;  the  plates,  cups,  and 
saucers,  from  China,  England,  or  France;  the  salt 
from  Liverpool,  and  the  pepper  from  India ;  the  meat, 
fish,  or  eggs,  butter  and  bread,  being  the  only  domestic 
products.  Thus,  all  the  four  quarters  of  the  world 
had  contributed  materials  to  this  daily  meal,  employing 
some  eight  or  ten  ships,  navigating  many  thousands 
of  miles,  and  hundreds,  or  perhaps  thousands,  of  indi 
viduals  in  their  transportation.  If  we  examine  our 
ordinary  apparel,  or  the  furniture  of  our  houses,  we 
shall,  in  like  manner,  find  that  a  considerable  part 
has  been  afforded  by  the  exchanges  of  commerce.* 

*  Some  years  after  the  preceding  illustration  had  formed  a  part 
of  my  lectures  in  the  University,  a  similar  exposition  appeared  in 
one  of  the  English  Reviews.  It  has  doubtless  occurred  to  others. 


112  POLITICAL     ECONOMY. 

That  portion  of  the  mercantile  class  who  carry  on 
the  foreign  commerce  of  the  country,  commonly  em 
ploy  large  capitals,  by  which  they  occasionally  enrich 
themselves  by  benefiting  the  community.  But,  as 
their  trade  is  very  irregular,  sometimes  yielding  enor 
mous  profits,  and  sometimes  being  attended  with  loss, 
the  average  gains  of  this  employment  of  capital,  ac 
cording  to  a  rule  previously  adverted  to,  is  probably 
less  than  those  of  most  others. 

There  is  another  portion  of  the  same  class  who  are 
employed  in  dividing  larger  quantities  of  useful  com 
modities  into  small  parcels,  to  suit  the  various  wants 
of  different  members  of  the  community,  for  which 
they  obtain  a  higher  price  to  compensate  them  for 
their  trouble,  for  the  deterioration  which  many  arti 
cles  experience  by  the  keeping,  and  for  the  time  that 
they  may  remain  unsold.  These  are  retail  dealers 
and  shop-keepers.  Their  business  being  less  preca 
rious  than  that  of  the  importing  merchant,  is  less 
likely  to  be  followed  by  bankruptcy,  and  is  rewarded 
by  greater  average  profits. 

There  are  some  dealers  of  this  class  in  whom  integ 
rity  is  of  peculiar  importance.  In  most  of  the  com 
modities  in  which  they  deal,  there  are  various  quali 
ties,  differing  greatly  in  value,  which  are  not  always 
discerned  by  any,  arid  not  at  all  by  the  inexperienced. 
These  dealers,  then,  supposing  them  honest  in  the 
price  or  measure  of  their  wares,  may  impose  on  their 
customers  as  to  the  quality  with  impunity.  Of  this 


COMMERCIAL    INDUSTRY.  113 

description  are  grocers,  dealers  in  liquor,  and  drug 
gists.  * 

The  gains  of  foreign  commerce  have  been  estimated 
by  very  different  rules.  It  was  once  considered  that 
a  commerce  in  which  the  imports  exceeded  the  ex 
ports  in  value  was  injurious,  and  was  beneficial  only 
when  the  exports  predominated;  it  being  assumed 
that  the  difference  was  paid  in  gold  and  silver,  which 
were  deemed  more  desirable  than  any  other  commo 
dity,  and  thought  to  constitute  the  only  just  measure 
of  the  national  wealth.  Governments  accordingly 
discouraged  imports  by  heavy  duties,  and  sometimes 
even  by  prohibitions,  and  encouraged  exports  by 
bounties  and  drawbacks,  or  the  repayment  of  duties. 

This  course  of  policy,  called  the  mercantile  sys 
tem,  involved  more  than  one  error.  It  was  a  mis 
take  to  suppose  that  there  was  any  peculiar  advan 
tage  in  receiving  the  precious  metals,  or  peculiar 
disadvantage  in  paying  them  away,  when  the  free 
course  of  trade  required  it ;  any  extraordinary  value 
which  they  might  chance  to  have  beyond  merchan 
dize  justly  determining  in  each  case  the  expediency 
or  inexpediency  of  exporting  them. 

It  is  also  a  mistake  to  assume  that  the  excess  of 
the  exports  over  the  imports  always  indicated  the 
profits  of  a  trade.  It  was,  for  example,  formerly  not 
unusual  for  an  adventurer  in  some  Atlantic  city  to 
take  out  to  the  Pacific  such  articles  as  were  suited 
to  the  trade  with  the  natives  on  that  coast,  to  the 
10*  H 


114  POLITICAL     ECONOMY. 

amount  of  a  few  thousand  dollars.  These  articles 
were  in  due  time  exchanged  with  the  Indians  for 
furs,  which,  being  then  transported  to  China,  were 
there  converted  into  a  cargo  of  teas  and  other  Chi 
nese  goods,  worth,  when  brought  to  the  United 
States,  one  or  two  hundred  thousand  dollars.  Thus 
a  trade  was  established  by  which  the  goods  exported 
had  brought  a  return  of  perhaps  an  hundred  times 
their  cost,  and  which  was,  consequently,  as  gainful 
as,  by  the  prevalent  doctrine  of  the  balance  of  trade, 
it  would  have  been  pronounced  injurious.  In  like 
manner  a  ship  is  fitted  for  a  whaling  voyage,  and 
takes  out  nothing  but  provisions  for  the  crew,  with 
her  fishing  tackle,  and  in  a  year,  or  two,  returns  with 
a  cargo  of  oil  and  spermaceti,  worth  perhaps  an  hun 
dred  thousand  dollars. 

These,  however,  are  anomalous  cases,  and  tend  to 
make  us  overrate  the  errors  of  the  rule  for  ascertain 
ing  the  balance  of  trade.  If,  indeed,  all  imported 
merchandise  was  paid  for  by  the  exports  in  the  same 
branch  of  business,  as  in  the  two  cases  mentioned, 
then  the  reverse  of  the  old  rule  would  be  correct, 
and  a  trade  would  be  profitable  in  proportion  as  the 
value  of  the  imports  exceeded  that  of  the  exports. 
But  such  is  not  the  fact ;  and  the  excess  of  imports 
may  indicate  not  the  profits  to  the  importer,  but  the 
amount  of  debt  contracted  by  him. 

In  a  series  of  years,  indeed,  the  whole  amount  of 
imports  and  of  exports  are  of  equal  value,  with  the 


COMMERCIAL     INDUSTRY.  115 

exception  of  a  small  excess  in  the  value  of  imports ; 
inasmuch  as  nations,  like  individuals,  in  their  ex 
changes,  commonly  receive  more  value  than  they 
part  with.  But  occasionally  there  is  a  great  differ 
ence  of  value  between  the  two.  Now,  the  exports 
of  a  country  may  commonly  be  regarded  as  so  much 
sold  to  foreign  nations,  and  the  imports  as  so  much 
bought  from  them.  But,  if  a  country  buys  more  than 
it  sells,  this  is  prima  facie  evidence  that  it  is  living  too 
fast.  It  so  far  lessens  the  national  wealth,  and  con 
tracts  a  debt  which  it  may  not  be  able  to  discharge 
without  inconvenience,  and  even  embarrassment. 

Such  is  often  the  condition  of  the  United  States  in 
its  commerce  with  Great  Britain,  which  constitutes 
three-fourths  of  their  trade  with  the  world.  In 
every  flush  of  prosperity  they  increase  their  imports 
of  foreign  merchandise,  and  are  but  too  apt  to  con 
tinue  their  extra  consumption  when  their  extra 
means  have  ceased.  The  abundant  capital  of  Great 
Britain  enables  our  merchants  to  obtain  credit 
whenever  they  ask  it,  and  the  debt  thus  contracted 
lays  the  foundation  for  future  embarrassment.  These 
facts  seem  to  present  a  yet  stronger  ground  for  a 
tolerably  high  impost  than  does  the  encouragement 
of  domestic  industry,  as  it  would  tend  to  check  un 
warranted  expense  of  living ;  and  so  far  as  it  failed 
in  introducing  frugality,  it  would  draw  from  the  im 
provident  class  some  compensation  to  the  public,  and 


116  POLITICAL     ECONOMY. 

strengthen  the  nation  in  its  ability  to  encounter  the 
difficulties  of  debt. 

There  are  many  fabrics  extensively  consumed, 
particularly  those  of  iron,  wool,  cotton,  and  leather, 
which  are  partly  manufactured  at  home  and  partly 
obtained  from  abroad  by  the  exchanges  of  commerce ; 
and  this  diversity  of  origin,  differently  affecting  dif 
ferent  interests,  has  given  rise  to  a  question  of  public 
policy  which  has  warmly  agitated  the  community; 
and  the  controversy  has  been  the  more  serious  and 
threatening  from  the  fact  that  the  principal  parties 
were  separated  by  geographical  lines  —  the  Northern 
States,  which  take  the  lead  in  manufactures,  being 
in  favor  of  protecting  and  encouraging  that  branch 
of  industry  by  taxing  its  foreign  rivals ;  while  the 
Southern  States,  which  are  mere  consumers  of  manu 
factured  articles,  were  in  favor  of  free  trade,  by  which 
they  could  buy  their  merchandise  in  the  cheapest 
market,  whether  it  was  foreign  or  domestic. 

Though  I  do  not  hope  to  reconcile  a  discordance 
of  views  founded  on  a  diversity  of  private  interests, 
I  shall  endeavor  to  state  with  fairness  the  principal 
arguments  by  the  parties  severally  supporting  their 
respective  tenets. 

The  friends  of  manufactures,  which  they  too  exclu 
sively  regard  as  domestic  industry,  maintain  that  it  is 
our  true  policy  to  manufacture  for  ourselves  those  arti 
cles  of  which  our  country  at  once  produces  the  raw 
materials  and  possesses  the  requisite  labor  and  capi- 


COMMERCIAL  INDUSTRY.        117 

tal ;  and  although,  by  the  greater  cheapness  of  human 
labor  in  some  foreign  countries,  where  the  laborer  is 
obliged  to  put  up  with  the  bare  necessaries  of  life, 
together  with  the   greater   cheapness  of  capital  in 
such  countries,  they  may  be  able  to  undersell  our 
manufacturers,  that  we    are    bound,  by  taxing   the 
foreign  articles,  to  protect  the  industry  of  our  own 
citizens  from  the  rivalship  of  foreign  paupers,  who 
are  as  much  below  them  in  the  modes  of  subsistence 
as  in  their  political  condition ;  and  farther,  that  the 
higher   price  which   may  be  paid   for  the  domestic 
manufacture  is  but  temporary ;  since  the  competition 
among  the  domestic  manufacturers  when  the  home 
market  has  been  secured  to  them,  together  with  the 
gradual  increase  of  skill  and  of  capital,  will  make 
the  domestic  fabrics  cheaper  and  cheaper,  until  they 
will  eventually  be  able  to  support  themselves  without 
public  protection  against  foreign  competitors.     The 
success  of  the  manufactures  of  cotton  are  relied  on  to 
prove  the  soundness  of  this  policy;  and  it  is  urged  that 
a  similar  course  pursued  towards  the  manufactures  of 
iron,  wool,  leather,  and  some  other  articles,  would  be 
attended  with  similar  results ;  and  lastly,  that  even 
if    the    domestic    manufacture    should   not   always 
become  cheaper  than  it  could  be  purchased  abroad, 
the  difference  would  be  more  than  compensated  by 
securing  a  supply,  from  domestic  sources,  of  all  arti 
cles  essential  to  the  comfort  of  our  citizens,  rather 


118  POLITICAL     ECONOMY. 

than  to  be  dependent  on  the  .good-will,  the  peace,  and 
the  varying  productiveness  of  other  nations. 

Their  opponents,  on  the  other  hand,  insist  that  the 
manufactures  purchased  by  the  exchanges  of  com 
merce  are  as  much  the  product  of  domestic  industry 
as  if  they  were  fabricated  at  home ;  since  they  have 
been  obtained  only  by  being  given  in  exchange  for 
commodities  which  are  the  product  of  our  own  land 
and  labor ;  and  that  it  is  one  of  the  highest  boasts 
of  political  freedom  that  every  citizen  should  have 
an  unrestricted  right  to  buy  where  he  can  obtain  the 
cheapest  and  best  articles,  or  those  which  he  thinks 
the  cheapest  and  best ;  and  to  compel  him,  by  a  tax 
on  the  cheaper  foreign  article,  to  buy  a  dearer  one 
made  at  home,  is  to  take  money  out  of  his  pocket  to 
put  it  into  the  pocket  of  another,  and  is  therefore  an 
act  of  tyranny  and  injustice ;  that,  although  the  pro 
tected  manufacture  may,  perchance,  in  time  become 
cheaper,  this  result  is  problematical,  since  many 
articles,  after  a  protection  of  forty  or  fifty  years,  can 
not  even  then  dispense  with  it ;  and  that  the  loss  is 
present  and  certain,  while  the  benefit  is  future  and 
contingent :  that  if  other  countries  can  make  cloth, 
cutlery,  or  railroad  iron  cheaper  than  we,  whether 
they  owe  their  advantage  to  their  pauper  labor,  their 
greater  skill,  or  more  abundant  capital,  we  should  be 
wise  to  profit  by  this  cheapness,  as  we  are  when  we 
import  our  pine-apples  rather  than  raise  them  in  hot 
houses,  and  bring  our  tea  from  the  farthest  extremity 


COMMERCIAL  INDUSTRY.        119 

of  the  globe  rather  than  raise  it  at  home,  as  Mr.  Ju- 
nius  Smith  has  shown  that  we  might  do. 

That,  inasmuch  as  the  sagacity  of  self-interest  will 
commonly  induce  individuals  to  employ  their  capital 
and  industry  in  the  most  profitable  modes,  the  policy 
which  induces  many  to  abandon  their  previous  pur 
suits  to  engage  in  manufacturing  may  be  presumed  to 
divert  labor  and  capital  to  a  business  less  suited  to* 
the  circumstances  of  the  country,  and  is  so  far  a 
source  of  national  loss. 

That,  from  the  great  distance  of  foreign  manufac 
turers  from  our  country,  the  cost  of  transporting  their 
fabrics  hither  —  comprehending  freight,  insurance, 
commissions,  and  interest  of  monev  —  is  a  standing 

»/  O 

bounty  and  encouragement  to  domestic  manufac 
turers,  which  are  likely  to  prompt  the  establishment 
of  all  those  that  are  adapted  to  the  circumstances  of 
the  country ;  and  when  they  are  further  stimulated 
by  an  impost,  rash  and  improvident  enterprises,  ruin 
ous  to  the  undertakers  and  injurious  to  the  nation, 
are  often  the  consequence. 

That,  while  it  is  a  wise  policy  for  a  country  to 
secure  a  domestic  supply  of  everything  essential  to 
the  national  defence,  all  further  interference  by  the 
government  is  injurious.  That  a  dependence  on 
foreign  countries  for  any  commodities  it  may  require 
has  advanced  the  cause  of  civilization  in  the  world, 
and  been  of  more  benefit  than  disadvantage  to  its 
separate  communities. 


120  POLITICAL    ECONOMY. 

Amidst  this  discrepancy  of  views,  I  think  it  will 
be  admitted  by  the  advocate  of  free  trade  that  where 
the  country  possessing  the  raw  materials,  skill,  and 
capital  required  for  a  manufacture,  is  so  far  ripe  for 
it  that  a  temporary  encouragement  will  enable  it  to 
overcome  the  early  difficulties  which  attend  on  every 
new  business,  and  finally  to  support  itself,  such  en 
couragement  may  be  justified,  and  the  country  be 
more  than  compensated  by  the  new  manufacture  for 
the  previous  cost  of  protection. 

But,  on  the  other  hand,  without  this  result,  the 
advocate  for  protective  restrictions  must  admit  that 
they  not  only  take  money  from  one  class  of  men  to 
give  to  another,  but  also  take  a  further  sum,  which 
is  given  to  no  one,  and  is,  in  fact,  so  much  value 
annihilated.  Thus,  suppose  that  a  ton  of  bar-iron 
could  be  imported  and  sold,  free  of  duty,  for  $60,  and 
that  iron  of  a  similar  quality  could  not  be  made  here 
and  sold  for  less  than  $75  a  ton,  and  that  the  profit 
to  the  iron-master  is  $10  a  ton.  Now,  let  us  suppose 
that,  to  secure  the  home  market  to  the  domestic  pro 
ducer,  an  impost  of  $20  the  ton  is  laid  on  this  iron. 
The  purchaser,  then,  of  a  ton,  in  giving  $75,  gives 
$15  more  than  the  foreign  iron  would  cost;  of  which 
$]  0  is  merely  transferred  from  him  to  the  iron-mas 
ter,  but  $5  is  received  by  no  one,  and  is  as  thoroughly 
destroyed  as  if  it  had  been  sunk  in  the  ocean. 


LI  T>  K  A  \i  \ 

N1VKKSITY  -OK 

CALIFORNIA^ 

XI. 

MENTAL    INDUSTRY. 

In  treating  of  profitable  industry,  we  must  not 
pretermit  mental  labor,  which  contributes  so  largely 
to  all  the  higher  interests  of  the  State.  Intellectual 
industry  may  be  classed  under  the  higher  public  func 
tionaries  :  the  three  professions  of  law,  physic,  and 
divinity ;  instructors  of  youth ;  cultivators  of  practical 
science,  such  as  engineers,  chemists,  astronomical 
observers ;  and  authors.  Though  the  public  function 
aries  all  receive  pecuniary  compensation,  yet  a  con 
siderable  part  of  their  remuneration  consists  in  the 
honor  conferred  by  the  office,  it  being  an  evidence  of 
merit  in  the  officer,  and  of  the  favor  of  those  who 
appointed  him. 

The  profession  of  the  law,  in  countries  where  the 
knowledge  of  civil  and  political  rights  is  much  culti 
vated,  especially  fits  men  for  public  employments. 
Accordingly,  a  very  large  majority  of  the  higher  civil 
functionaries,  both  in  the  General  and  State  Govern 
ments,  have  been  taken  from  this  profession.  The 
judges,  a  corps  of  great  power  and  influence,  can  be 
taken  from  no  other.  Of  the  fifteen  Presidents  of 
the  United  States,  all  but  General  Washington,  Gen 
eral  Taylor,  and  Mr.  Madison  (who  was  educated  for 
the  bar),  had  been  practising  lawyers. 

A  consequence  of  this  success  of  the  legal  profession 
11  (121) 


122  POLITICAL    ECONOMY. 

is,  that  the  honors  and  emoluments  obtained  by  it 
constitute  a  part  of  its  recommendation,  and  swell 
the  list  of  its  competitors,  so  as  to  reduce  the  average 
remuneration  received  by  this  class  to  the  level  of 
that  received  by  other  classes,  in  proportion  to  the 
intellectual  and  moral  qualities  which  they  put  in 
requisition.  These,  however,  it  must  be  remembered, 
are  very  high.  To  be  an  eminent  and  successful 
lawyer  requires  the  gift  of  unwonted  powers  of  speech, 
either  for  reasoning  or  persuasion,  and  the  moral 
qualities  of  integrity  and  discretion.  He  must  be 
faithful,  not  only  to  the  interests,  but  often  also  to 
the  secrets  of  his  client ;  and  he  must  be  superior  to 
the  temptation  of  taking  advantage  of  that  client's 
necessities  or  difficulties.  These  species  of  moral 
worth  they  rarely  fail  to  possess ;  and,  in  the  higher 
departments  of  the  profession,  no  class  of  men  have 
a  more  exalted  sense  of  honor,  or  the  obligations  of 
conscience. 

In  the  practice  of  medicine,  high  intellectual  and 
moral  qualities  are  also  required,  and  are  also  fre 
quently  found ;  but,  as  the  merits  of  a  practitioner  in 
this  profession  cannot  be  brought  to  the  same  ready 
and  easy  test  as  those  of  a  clergyman  or  lawyer,  there 
is  in  it  a  greater  number  of  unworthy  pretenders, 
who  profit  by  the  general  desire  of  health  or  relief 
from  disease,  as  well  as  by  the  credulity  of  ignorance, 
to  vend  quack  medicines,  sometimes  merely  worthless, 
and  sometimes  injurious,  from  which  they  occasionally 


MENTAL    INDUSTRY.  123 

derive  great  gains,  as  are  indicated  by  the  liberal 
sums  paid  for  advertising  their  remedies,  and  by  the 
large  fortunes  they  are  known  to  amass.  The  secret 
of  a  celebrated  panacea  was  obtained  from  a  German 
soldier,  in  discharge  of  a  debt  of  twenty  dollars,  and 
remained  for  several  years  unused  by  its  possessor; 
but  when  at  length  put  into  operation,  and  managed 
with  great  industry  and  address,  it  proved  the  means 
of  acquiring  a  fortune  of  near,  or  quite,  half  a  million 
of  dollars. 

Of  the  different  branches  of  the  healing  art,  surgery 
commonly  receives  the  highest  rewards,  partly  on 
account  of  the  unequivocal  relief  from  great  suffering 
which  it  often  affords,  and  partly  because  there  is  but 
a  small  proportion  of  the  medical  profession  who  pos 
sess  at  once  the  knowledge,  the  self-command,  and 
the  practical  skill  required  in  surgery. 

Nearly  akin  to  this  art,  but  of  an  humbler  character, 
is  that  of  the  dentist,  which,  though  comparatively 
of  recent  origin,*  may  be  regarded  as  among  the  most 
useful  of  human  arts.  It  is  favorable  to  health  by 
assisting  mastication ;  it  aids  men  in  the  noble  office 
of  speech;  and  it  contributes  to  make  them  more 
agreeable  to  others.  Its  followers  have,  therefore,  in 
half  a  century,  been  multiplied  more  than  fifty  fold, 
and  most  of  them  receive  a  very  liberal  compensation. 


*  I  can  remember  when  there  was  but  one  dentist  in  the  State 
of  Virginia.  He  was  a  German,  and  his  original  occupation  was 
that  of  a  farrier. 


124  POLITICAL    ECONOMY. 

In  the  clerical  profession,  as  has  been  mentioned, 
a  part  of  the  remuneration,  besides  the  gratification 
of  the  religious  instinct,  being  the  high  respect  in 
which  it  is  held,  the  pecuniary  compensation  is  thereby 
greatly  diminished.  The  rewards,  however,  of  this 
description,  are  often  very  liberal,  and  are  in  propor 
tion  to  the  intellectual  and  moral  qualities,  and  espe 
cially  oratorical  talents  which  its  followers  possess. 

The  scientific  class,  comprehending  instructors  of 
youth,  engineers,  and  practical  chemists  and  metal 
lurgists,  are  variously  remunerated.  The  humblest 
description  of  teachers  commonly  obtain  a  very  mode 
rate  compensation,  partly  by  reason  of  the  compara 
tive  ease  of  the  employment.  The  irksomeness  of 
bodily  labor  to  those  not  accustomed  to  it,  will  com 
monly  induce  a  young  man  to  prefer  two  hundred 
dollars  for  keeping  a  school,  to  three  hundred  dollars 
for  cutting  down  trees  or  ploughing.  Besides,  the 
former  occupation  has  more  dignity  from  its  intellec 
tual  character.  This  fact,  by  recommending  the 
business  of  teaching,  tends  to  lessen  its  pecuniary 
rewards ;  while,  on  the  other  hand,  its  demand  for 
qualifications  above  the  average  required  for  common 
laborers,  tends  to  raise  them. 

Professorships  in  universities  and  colleges,  requiring 
both  intellectual  accomplishments  and  elevation  of 
moral  character,  are  generally  well  remunerated. 
But  as  their  incomes  are  certain,  they  are  less  than 
those  of  successful  practitioners  of  law  or  medicine. 


MENTAL    INDUSTRY.  125 

Civil  engineers,  being  employed  in  the  construction 
of  public  works  of  great  cost  and  of  national  import 
ance,  commonly  receive  a  remuneration  in  proportion 
to  their  responsibility.  It  can  easily  happen  that  a 
difference  in  the  science  and  sound  judgment  of  two 
engineers  may,  in  such  costly  and  often  difficult  en 
terprises,  be  equal  to  one  or  more  hundred  thousand 
dollars.  Those,  then,  who  are  at  the  head  of  the 
profession,  generally  obtain  very  high  rewards  for 
their  services.  Labor  of  this  rank,  in  fact,  is  at  a 
monopoly  price. 

It  has  been  remarked  that  the  inventors  of  valuable 
discoveries  are  commonly  ill  rewarded,  and  that  the 
price  which  the  public  pays  for  the  new  benefit  is 
obtained  by  a  very  inferior  class  of  men,  who  make 
these  discoveries  practically  useful.  The  fact  is  un 
doubtedly  as  has  been  supposed,  and  the  explanation 
is  not  difficult. 

In  the  first  place,  it  must  be  remembered  that  the 
reward  which  the  inventive  class  chiefly  regard  is 
fame  and  the  esteem  of  their  fellow-men,  which  ad 
vantages  an  inventor  can  best  obtain  by  publishing 
his  discoveries  to  the  world,  and  thus  leaving  them 
to  the  free  use  of  all  competitors.  When  Jenner  dis 
covered  the  preventive  virtue  of  the  cow-pox,  he 
might  probably  have  derived  large  gains  by  keeping 
the  secret  to  himself.  So  of  Watt's  steam-engine; 
and  the  use  of  ether  and  chloroform  in  relieving  pain. 

But,  secondly,  even  if  the  man  of  science  were  de 
ll  * 


126  POLITICAL    ECONOMY. 

sirous  of  rendering  his  discoveries  a  source  of  pecuniary 
profit,  he  is  likely  to  want  the  requisite  qualifications. 
To  embody  what  he  has  discovered  in  fit,  visible,  and 
tangible  forms,  when  necessary;  to  recommend  them 
successfully  to  the  notice  and  confidence  of  the  public ; 
and  to  defeat  the  cavils  and  hostility  which  they  are 
certain  to  encounter,  requires  a  knowledge  of  men 
and  things,  and  a  talent  for  business  in  which  the 
devotees  of  science  are  almost  always  grossly  deficient. 
These  business  talents  are  possessed  by  men  very  dif 
ferently  trained,  who  thus  benefit  themselves  by  bene 
fiting  the  public. 

In  the  third  place,  the  want  of  capital  is  alone 
sufficient  to  render  some  discoveries  and  inventions 
that  are  pregnant  with  utility,  valueless  to  their 
authors.  Had  Oliver  Evans  possessed  the  requisite 
funds,  or  the  credit  to  obtain  them,  it  appears  incon 
testable  from  the  little  book  published  by  him,  that  he 
would  have  perfected  his  steam-carriage  for  ordinary 
roads ;  iron  tracks  would  naturally  have  succeeded, 
and  thus  railways  would  have  been  anticipated. 
What  he  had  not  the  means  of  effecting,  he  distinctly 
and  emphatically  predicted  would  soon  be  accom 
plished  by  others. 

But  of  all  intellectual  labors,  those  of  authors  are, 
in  general,  the  worst  rewarded.  Now  and  then, 
indeed,  a  popular  writer  receives  a  liberal  remunera 
tion  ;  but,  for  one  of  this  description,  there  are  proba 
bly  fifty  failures,  and  perhaps  twenty  who  do  not 


MENTAL    INDUSTRY.  127 

receive  for  their  efforts  in  this  way  the  pay  of  a  common 
laborer. 

A  main  cause  of  this  signal  want  of  success  seems 
to  be  the  large  number  of  competitors  for  the  public 
favor,  of  this  class,  arising  from  the  very  lively  desire 
of  literary  distinction,  and  the  self-delusion  which 
inspires  the  hope  of  attaining  it ;  so  that  a  great  ma 
jority  of  the  books  published  meet  with  the  neglect 
and  oblivion  which  they  justly  merit. 

A  small  number  of  authors,  having  at  once  rare 
merit  and  good  fortune,  are  very  highly  remunerated, 
for  they  are  able  to  command  monopoly  prices.  Those 
of  average  merit,  who  are  best  rewarded,  are  writers 
of  approved  school-books,  voyages  and  travels,  and, 
above  all,  works  of  fiction.  Men  pay  more  freely  and 
liberally  for  pleasure  than  instruction ;  and  there  are 
probably  an  hundred  readers  of  an  interesting  romance 
for  one  of  an  eloquent  sermon. 

As  a  general  rule,  the  remuneration  of  every  species 
of  labor  which  administers  to  our  pleasures  will  be 
certain  and  liberal.  This  is  strikingly  manifested  in 
all  the  imitative  arts,  in  music,  dramatic  exhibitions, 
public  shows,  and  games.  In  the  nobler  species  — 
painting  and  sculpture — we  see  the  elements  of  high 
price  in  the  great  demand,  caused  by  the  exquisite 
pleasure  they  give;  and  in  the  small  supply,  caused 
by  the  rarity  of  the  talent  exhibited  by  a  first-rate 
artist.  Accordingly  a  portrait  by  an  eminent  painter 
may  sell  for  five  hundred  dollars,  and  a  statue  by 


128  POLITICAL    ECONOMY. 

Canova  or  Thorwaldsen  for  from  five  to  ten  thousand 
dollars.*  It  is  not  unusual  for  a  great  singer  or  actor 
to  earn  several  hundred  dollars  in  a  week ;  and  the 
celebrated  Jenny  Lind,  whose  tickets  of  admission 
were  sold  at  unprecedented  prices,  is  supposed  to 
have  earned,  in  the  United  States,  for  herself  and  her 
employer,  in  a  single  year,  more  than  three  hundred 
thousand  dollars.  Were  Garrick,  or  Mrs.  Siddons,  or 
Talma,  now  living,  and  disposed  to  make  the  most 
of  their  rare  gifts,  they  might  probably  earn  as  much. 
The  compensation  which  should  be  received  by  the 
public  functionaries,  particularly  by  legislators,  has 
been  often  discussed,  and  it  is  a  problem  of  some 
nicety  to  decide  what  rate  of  pay  is  most  conducive 
to  the  public  welfare.  A  very  high  or  very  low  re 
muneration  has  each  its  respective  disadvantages. 
If  it  be  very  low,  or,  as  in  the  British  Parliament, 
nothing  at  all,  it  would  confine  the  office  to  rich  men, 
or  the  dependants  on  rich  men,  and  exclude  many 
who  may  be  superior  both  in  ability  and  love  of 
country,  but  who  could  not  afford  to  give  their  time 
gratuitously  to  the  public.  In  monarchial  govern 
ments,  those  who  confer  their  services  may  be  com 
pensated  by  lucrative  places ;  but  in  popular  govern 
ments  that  would  be  impracticable,  and  would  be 
liable,  moreover,  to  the  objection  of  making  the 
legislator  dependent  on  the  donor  of  his  profitable 

*  Powers'  Greek  Slave  has  recently  sold  at  auction  in  England 
for  nine  thousand  dollars. 


MENTAL    INDUSTRY.  129 

office.  If,  on  the  other  hand,  the  remuneration  be  very 
high,  the  post  is  set  up  as  a  prize,  to  be  scrambled  for 
by  such  of  the  mercenary,  the  cunning,  and  the  un 
principled  as  assume  the  character  of  being  the 
friends  of  the  people.  There  is  always  some  danger 
in  making  public  offices  very  desirable.  The  power 
of  appointment,  whether  exercised  by  one,  a  few,  or 
the  people  at  large,  is  ever  exposed  to  the  chance  of 
mistake  or  abuse.  No  one  of  these  can  certainly 
distinguish  between  their  flatterers  and  friends.  It 
is  better,  therefore,  that  public  men  should  be  the 
unbiassed  choice  of  the  constituent  class,  than  that 
candidates  should  offer  themselves  to  be  approved  or 
rejected  by  the  people.  In  this  way  alone,  modest 
merit,  —  often  the  highest  merit,  —  which  would 
shrink  from  what  might  seem  an  ostentatious  self- 
display,  would  be  brought  forth  from  its  retirement 
to  high  station.  It  was  in  this  way  that  the  Ameri 
can  people  procured  the  invaluable  services  of  George 
Washington,  who  never  was  a  candidate  for  any  one 
of  the  high  offices  which  he  filled ;  and  some  of  the 
most  meritorious  of  his  successors  were  almost  equally 
passive  in  obtaining  their  elevation. 

Upon  the  whole,  it  would  seem  to  be  most  conso 
nant  to  republican  principles  that  legislators  should 
be  paid  for  their  services ;  that  their  pay  should  be 
such  as  to  enable  men  of  small  property  to  serve,  so 
that  the  people  should  be  less  circumscribed  in  their 
choice ;  but  that  it  should  not  be  so  large  as  to  en- 

i 


130  POLITICAL     ECONOMY. 

courage  intrigue  or  corruption,  or  to  give  an  undue 
stimulus  to  mercenary  men  to  obtain  it ;  that  the  pay 
should  be  in  proportion  to  the  length  of  the  service 
—  that  is,  a  daily  pay  rather  than  an  annual  salary ; 
and  lastly,  that  the  pay  which  the  alteration  of  the 
value  of  money,  or  any  other  cause,  might  make  it 
expedient  to  change,  should  never  be  received  by  the 
legislators  who  made  it,  but  only  by  their  successors. 
Experience  amply  justifies  those  who  opposed  this 
part  of  the  Federal  Constitution,  who  objected  that, 
if  the  members  could  raise  their  own  compensation, 
it  would  expose  them  to  the  temptation  of  paying 
themselves  too  liberally,  and,  at  all  events,  to  the 
suspicions  of  the  people  ;  which,  by  lessening  mutual 
confidence,  is  always  injurious  both  to  the  party  sus 
pecting  and  the  party  suspected.  It  is  a  matter  of 
equal  surprise  and  regret  to  the  friend  of  popular 
government,  that  when  Congress,  in  1818,  gave  to  its 
members  an  annual  salary  of  $1500,  the  people,  dis 
approving  both  the  mode  of  pay  and  its  amount, 
indignantly  turned  out  almost  every  man  who  had 
voted  for  it;  yet  when,  after  the  lapse  of  forty  years, 
the  same  body  gave  to  its  members  a  salary  of  double 
the  amount,  it  has  escaped  open  popular  censure.  No 
satisfactory  solution  has  been  given  of  the  striking 
inconsistency. 

There  are  several  commodities  of  great  utility  and 
extensive  consumption  which  seem  to  have  equal 
claims  to  be  regarded  as  raw  produce,  and  as  the  pro- 


MENTAL     INDUSTRY.  131 

duct  of  manufacturing  industry.  Of  this  character 
is  sugar,  whether  made  from  the  cane,  the  beet,  or 
the  maple.  So  of  every  kind  of  wine,  of  cider,  but 
ter  and  cheese,  and  vegetable  oils. 

We  have  now  gone  through  the  subject  of  labor ; 
yet  before  we  take  leave  of  it,  let  us  pause  awhile  to 
notice  its  great  and  diversified  agency  in  creating 
national  wealth.  Though  labor  must  have  the  aid 
of  natural  agents,  yet  they  would  be  of  little  avail 
without  the  concurrence  of  human  industry.  This 
so  acts  upon  land  as  to  make  it  produce  the  materials 
of  man's  aliment  twenty-fold,  or  even  fifty-fold  of 
what  would  be  its  spontaneous  yield.  It  furnishes 
him  with  apparel,  derived  partly  from  the  animal 
and  partly  from  the  vegetable  world,  suitable  to 
every  season.  It  enables  him  to  provide  commodious 
dwellings,  to  afford  him  warmth  in  the  winter  and 
shade  in  the  summer ;  to  make  tools  and  utensils,  in 
infinite  variety,  to  facilitate  his  labors,  and  to  enlarge 
his  powers  over  brute  matter.  After  thus  contri 
buting  to  his  more  important  wants,  it  augments  and 
multiplies  his  pleasures.  It  gives  to  his  edifices  and 
his  furniture  those  forms  that  are  most  grateful  to 
his  eye  or  his  taste.  It  ransacks  the  three  kingdoms 
of  nature,  both  on  the  land  and  in  the  ocean,  for  ma 
terials  of  aliment,  and  combines  them  in  endless  va 
riety,  to  make  them  at  once  pleasant  and  wholesome. 
It  ministers  to  the  gratification  of  all  the  five  senses, 
and  delights  his  taste  and  imagination  by  the  culti- 


132  POLITICAL    ECONOMY. 

vation  of  literature  and  the  fine  arts.  It  exercises 
the  noble  faculty  of  reason  to  discover  and  under 
stand  the  laws  both  of  matter  and  of  mind,  and  to 
discharge  the  various  functions  of  government.  Man 
is,  indeed,  urged  to  almost  unceasing  efforts  to  win 
the  means  of  subsistence ;  but  he  is  amply  rewarded 
for  his  toils  by  the  result  of  those  very  efforts,  and  is 
always  rising  in  dignity  by  obeying  the  instinctive 
desire  of  promoting  his  own  happiness. 

Every  faculty  of  the  mind,  whether  it  be  intellect 
or  sense,  is  thus  put  in  requisition,  and  they  all  con 
tribute  —  each  in  its  way  —  to  the  complicated  ma 
chine  of  civil  society.  The  powers  of  man  over  mat 
ter  are  ever  enlarging,  either  in  overcoming  its  diver 
sified  forms  of  resistance,  or  in  making  it  subservient 
to  some  purpose  of  utility,  greater  or  less,  from  a 
lucifer-match,  or  daguerreotype,  to  a  railroad  or 
steamship ;  and  thus  it  may  be  said,  without  a  meta 
phor,  that,  by  the  exercise  of  the  endowments  with 
which  he  has  been  so  liberally  gifted,  he  is  the  arti 
ficer  of  his  own  condition. 


CHAPTER  XI. 

CAPITAL. 

WE  will  now  consider  the  third  great  source  of 
national  wealth  —  capital;  by  which  is  meant  that 
portion  of  the  former  products  which  has  been  saved 
for  future  use,  and  which  may  consist  of  provisions, 
of  raw  materials,  of  manufactured  goods,  or  of  money, 
which  is  exchangeable  for  them  all. 

Capital  contributes  to  production  in  three  ways. 
First.  It  is  indispensable  to  the  execution  of  any 
useful  or  profitable  operation ;  since,  unless  the  ma 
terials  for  the  work,  and  provisions  to  feed  the  work 
men,  or  their  equivalent,  had  been  previously  saved 
by  some  one,  the  operation  could  not  be  performed. 
Without  this  preliminary  saving,  man  would  be  un 
able  to  build,  forge,  weave,  mine,  plow,  sow,  or  reap ; 
nor  could  he  engage  in  commerce  without  the  pre 
vious  accumulation  of  capital. 

Secondly.  Capital  is  productive  by  being  converted 
into  labor-saving  machines.  In  this  way  it  may  pro 
duce  many  times  the  value  expended.  Thus,  to  take 
one  of  the  simplest  forms  of  such  machinery  —  a 
wheelbarrow.  By  means  of  the  capital  laid  out  in 
making  this  machine,  a  man  may  transport  in  a  day 
VI  (133) 


104  POLITICAL     ECONOMY. 

three  or  four  times  as  much  as  he  could  carry  on  his 
shoulders.  The  profits  of  a  cart  or  wagon,  as  the 
means  of  transport,  would  be  yet  more  considerable. 
To  give  another  example,  suppose  two  men  to  want 
a  large  quantity  of  plank  for  building.  Instead  of 
sawing  it  by  their  own  hands,  at  the  rate  of  from  one 
to  two  hundred  feet  in  a  day,  they  might,  by  employ 
ing  themselves  a  few  weeks  in  erecting  a  saw-mill, 
turned  by  running  water,  obtain  more  plank  in  a 
month,  and  with  far  greater  ease,  than  they  could  by 
their  whip-saw  in  a  year.  Man  can  also,  by  means 
of  tools,  which  his  previous  savings  have  enabled  him 
to  provide,  often  achieve  a  mastery  over  brute  mat 
ter  to  which  his  unaided  natural  powers  would  be 
utterly  inadequate.  Without  a  saw,  for  example,  or 
other  tool,  he  would  have  been  incapable  of  making 
a  plank  by  his  personal  efforts. 

Thirdly.  Capital  is  productive  by  enabling  its  pos 
sessor  to  have  the  benefit  of  co-operation,  or  what 
has  been  called  "  the  division  of  labor ;"  which  often, 
as  we  have  seen,  so  greatly  increases  production. 
Without  capital,  a  manufacture,  the  different  parts  of 
which  may  be  advantageously  distributed  among  seve 
ral  workmen,  cannot  be  carried  on ;  but  with  it,  the 
power  of  production  may  be  prodigiously  multiplied, 
and  the  cost  of  the  article  produced  be  proportionally 
cheapened. 

By  the  first  of  these  three  modes,  capital  merely 
changes  its  form,  without  adding  to  the  exchangeable 


CAPITAL.  135 

values  in  the  community ;  but  by  the  two  last,  the 
quantity  of  useful  products  having  been  greatly  aug 
mented,  the  effect  is  partly  to  make  those  products 
cheaper,  and  partly  to  add  to  the  exchangeable  values 
or  the  capital  of  the  community.  Thus,  suppose  a 
certain  amount  of  capital  vested  in  a  manufactory  of 
nails.  The  consumers  of  those  articles  will  be  gain 
ers  by  their  greater  cheapness,  and  the  w^hole  com 
munity  will  have  gained  by  the  amount  thus  saved, 
and  by  the  profit  accruing  to  the  manufacturer  after 
repaying  the  cost  of  the  raw  material  and  labor 
expended. 

Capital  is  of  two  kinds — circulating  and  fixed.  By 
circulating  capital  is  meant  that  portion  which,  hav 
ing  been  vested  in  raw  materials  or  labor,  is  con 
sumed  and  reproduced  in  some  manufacture  or  profit 
able  operation.  Of  this  character  are  the  wool  or 
cotton  worked  up,  and  the  pay  of  the  workmen  in 
manufacturing  those  articles.  So  the  iron  and  labor 
expended  in  the  fabrication  of  hardware  or  cutlery ; 
and  the  capital  thus  consumed  is  reproduced,  and 
again  circulates  in  the  manufactured  article.  It 
yields  a  profit  only  by  circulation.  Fixed  capital 
consists  of  those  articles  employed  in  any  productive 
operation,  which  are  not  thereby  consumed,  but  may 
be  repeatedly  used,  until  they  are  worn  out;  such  as 
the  buildings,  machinery,  and  tools  of  a  manufac 
tory.  The  fixed  capital  of  a  tailor  is  his  shears,  his 
goose,  and  his  shop,  if  it  belong  to  him.  If  he 


136  POLITICAL     ECONOMY. 

merely  rents  it,  then  the  rent,  like  the  cloth  he 
works  up,  is  a  part  of  his  circulating  capital.  Fixed 
capital  yields  profit  without  exchanging  hands. 

Capital,  like  land  and  labor,  has  its  appropriate 
remuneration.  What  are  called  the  profits  of  capital, 
both  popularly  and  by  some  political  economists, 
means  the  entire  gains  of  any  extensive  employment 
of  capital ;  but  where  the  profit  has  been  the  fruit  of 
the  personal  superintendence  and  judicious  manage 
ment  of  the  owner,  that  is  properly  the  wages  of 
labor,  and  the  residue  is  alone  the  profits  of  capital, 
which  is  the  same  thing  as  the  interest  of  money. 

Interest,  or  a  compensation  for  the  use  of  money  or 
capital  lent,  has  been  in  some  countries  deemed  un 
justifiable,  and  therefore  prohibited.  But  this  was 
when  money,  hoarded  away,  brought  no  profit  to  the 
lender,  and  when  the  borrower,  wanting  it  only  to 
spend,  derived  no  profit  from  the  use  of  it.  Where, 
then,  the  lender  had  sufficient  security  for  the  repay 
ment  of  the  loan,  it  seemed  unconscientious  to  demand 
also  interest. 

But  after  communities  became  commercial  and  in 
dustrious,  and  money  could  be  made  by  the  use  of 
money,  it  was  as  reasonable  that  a  consideration 
should  be  paid  for  the  use  of  capital,  as  that  rent 
should  be  paid  for  land,  or  hire  for  the  use  of  a  slave 
or  a  horse.  Where,  by  an  outlay  of  capital,  a  labor- 
saving  machine,  yielding  large  profits,  could  be  pro 
cured,  it  could  make  no  difference  whether  a  rent  was 


CAPITAL.  137 

paid  for  the  machine,  or  an  interest  on  the  money 
required  for  its  purchase. 

Besides,  a  present  pleasure  outweighs  one  that  is 
distant  and  future.  When,  therefore,  one  forbearing 
to  use  the  means  of  present  gratification,  transfers 
them  to  another  by  way  of  loan,  he  has  a  fair  claim, 
when  the  money  is  returned,  to  a  further  compensa- 
.tion  for  the  delay,  and  for  his  forbearance;  or,  hi 
other  words,  interest,  which  thus  rewards  privation 
or  abstinence,  as  rent  pays  for  the  use  of  land,  and 
wages  for  the  toils  of  labor. 

The  profits  of  capital  or  interest,  like  everything 

-«*^*** 

else  exchangeable,  obeys  the  law  of  supply  and  de 
mand  ;  and  is  higher  or  lower,  according  to  its  abun 
dance  and  the  field  for  its  employment.  In  general, 
interest  is  high  in  newly-settled  countries,  where  the 
more  profitable  modes  of  employing  capital  have  not 
been  pre-occupied ;  and  as  a  country  advances  in 
population  and  wrealth,  interest  commonly  declines. 
In  England,  in  the  15th  century,  it  was  10  per  cent. 
It  then  successively  fell  to  8,  6,  and  at  last  to  5  per 
cent.  But  the  government  is  able  to  borrow  at  about 
3  J  per  cent.,  and  the  public  securities,  at  the  ordinary 
price,  do  not  yield  more ;  while  in  all  the  new  British 
colonies,  whether  in  Australia,  Cape  of  Good  Hope, 
New  Zealand,  or  North  America,  interest  is  high. 
There  is  a  striking  difference  in  this  respect  between 
the  new  and  the  old  States  of  the  Union  —  interest 
being  much  higher  in  the  first  than  the  last. 
12* 


138  POLITICAL    ECONOMY. 

But  everywhere  the  market  rate  of  interest  is 
liable  to  incessant  fluctuations,  according  to  the  vari 
ations  in  the  supply  or  the  demand  for  capital. 

Thus,  interest  rises  when  there  is  a  deficiency  in 
the  supply  of  money,  as  where,  from  any  cause,  it 
has  been  largely  exported.  Capital  is  also  scarce, 
and  interest  proportionally  high,  in  countries  where 
the  exactions  of  the  government  prevent  the  accumu 
lation  of  capital,  both  by  discouraging  industry,  and 
lessening  the  little  it  does  earn.  By  reason  of  this 
insecurity  of  capital,  interest,  both  in  India  and  China, 
is  10  or  12  per  cent,  per  annum.  The  same  effect  is 
produced  by  an  increased  demand,  whether  it  be 
caused  by  the  opening  of  new  branches  of  trade  which 
promise  great  profits,  or  by  an  unwonted  enlargement 
of  the  old  branches. 

Sometimes,  again,  the  augmented  demand  is  caused 
by  the  indebtedness  of  the  community,  in  consequence 
of  previous  over-trading.  This  occurred  in  New 
York,  and  some  other  States,  in  1837,  when  the 
market  rate  of  interest  was  unusually  high,  though 
the  currency  was  confessedly  more  distended  than 
usual.  These  two  facts  seemed,  to  the  New  York 
Commissioners  of  the  Safety  Fund,  inconsistent  with 
the  received  doctrines  of  political  economy;  but  the 
apparent  inconsistency  was  readily  explained  by  the 
fact,  that  the  increase  of  debt  (in  consequence  of  the 
very  extensive  speculations  in  the  public  lands,) 


CAPITAL.  139 

tended  to  raise  the  rate  of  interest  yet  higher  than 
the  increased  currency  tended  to  lower  it. 

The  market  rate  of  interest  is  also  affected  both  by 
the  amount  of  the  loan,  and  the  time  for  which  it  is 
made.  Interest  is  generally  less  in  loans  for  large 
sums  than  for  small  ones.  The  difference  is  the 
result  of  several  circumstances.  There  are  many 
more  persons  who  are  both  willing  and  able  to  borrow 
a  small  amount  than  a  large  one.  The  field  for  safe 
investment  of  great  capitals  is  a  limited  one;  and  of 
the  greatest,  governments  are  the  principal  borrowers 
—  private  individuals,  though  they  might  be  willing 
enough  to  borrow,  not  often  being  able  to  give  the 
required  security.  Governments  can  commonly  bor 
row  at  an  annual  interest  of  3  or  4  per  cent.,  while 
individuals  pay  a  much  higher  rate,  according  to  the 
amount  and  the  estimated  risk. 

It  is  said  that  there  are  individuals  in  London 
who  make  a  livelihood  by  lending  £10  or  £12  to  the 
women  who  sell  oranges,  cakes,  &c.  Five  shillings 
is  the  sum  lent  to  each  one,  for  a  day,  for  which  she 
pays  sixpence,  which  is  at  the  enormous  rate  of  more 
than  3000  per  cent,  in  a  year. 

The  effect  of  the  duration  of  the  loan  on  the  rate 
of  interest  is  not  uniform.  As  a  general  rule,  large 
loans,  where  the  security  is  undoubted,  are  made  at 
a  lower  rate  than  small  ones.  This  arises  from  the 
known  difficulty  of  lending  large  sums  with  satisfac 
tory  security,  by  reason  of  which  the  capitalist  will 


340  POLITICAL     ECONOMY. 

take  a  lower  rate  of  interest  rather  than  be  soon 
compelled  to  seek  a  new  investment,  and  to  incur  a 
loss  of  interest  by  the  delay.  Thus  Congress,  when, 
in  1824,  it  voted  a  liberal  pecuniary  donation  to  La 
Fayette,  for  the  purpose  of  enhancing  its  value,  cre 
ated  a  stock  for  the  special  purpose,  and  made  it 
payable  at  a  distant  day;  in  consequence  of  which,  it 
was  sold  in  the  market  above  par.  A  similar  course, 
from  a  similar  motive,  was  pursued  by  the  States  of 
South  Carolina  and  Louisiana,  in  their  donations  to 
the  daughter  of  Mr.  Jefferson;  and  the  stock,  of  which 
those  donations  consisted,  was  sold  for  10  per  cent, 
above  its  par  value. 

But  where  the  sums  lent  are  of  a  small  or  mode 
rate  amount,  a  different  rule  often  prevails,  and  lend 
ers  will  take  a  less  interest  for  a  small  term  than  a 
long  one.  There  are  always  sums  of  money,  in  a 
wealthy  community,  which  are  for  a  time  unem 
ployed,  and  which  the  owners  are  not  willing  to  put 
long  beyond  their  control.  They  are  therefore  will 
ing  to  lend  them  for  a  short  time  at  a  low  interest, 
on  condition  that  the  money  will  be  returned  when 
demanded,  but  which  they  would  not  lend  for  a  long 
term,  even  at  a  high  interest,  such  as  may  always  be 
commanded  from  a  portion  of  the  community. 

In  newly  settled  fertile  countries,  like  many  of 
these  States,  the  raw  products  of  the  soil  are  abun 
dant  and  cheap,  from  the  large  supply  of  good  land, 
while  the  price  of  labor  and  the  market  rate  of  inte- 


CAPITAL.  141 

rest  are  both  high,  from  the  wide  field  open  to  both 
for  profitable  employment ;  and  the  general  tendency 
of  both  labor  and  capital  is  to  decline  with  the  in 
crease  of  numbers.  But  there  is  no  necessary  con 
nection  between  the  two.  If,  from  any  cause,  capital 
does  not  increase  with  the  population,  —  whether 
from  high  taxes,  a  decline  of  industry,  or  a  want  of 
frugality,  —  then  interest  will  remain  unchanged, 
though  labor  has  fallen.  Such  is  the  condition  of 
China  and  Hindostan.  On  the  other  hand,  the  sup 
ply  of  capital  may  increase  faster  than  that  of  labor, 
as  it  does  in  England,  and,  consequently,  the  market 
rate  of  interest  may  there  continue  to  fall,  though 
the  price  of  labor,  from  its  undiminished  field  of  em 
ployment,  may  be  unchanged  in  value. 

While  the  rent  of  land  and  wages  of  labor  are  left 
everywhere  to  regulate  themselves  according  to  the 
laws  of  supply  and  demand,  the  profits  of  capital,  or 
interest  of  money,  has  been,  in  almost  all  countries, 
regulated  by  law ;  which,  aiming  to  protect  borrowers 
from  the  extortion  of  the  lenders,  fixes  the  highest 
rate  of  interest,  which  lenders  are  forbidden  to 
exceed,  under  a  penalty.  This  prohibition  has  pro 
bably  arisen  partly  from  the  ancient  prejudice  against 
taking  any  interest  at  all,  and  partly  from  the  gene 
ral  sympathy  of  mankind  with  borrowers  and  debtors 
rather  than  with  the  lenders.  But  as  these  laws 
interfere  with  the  freedom  of  individual  action,  and 
impose  a  restraint  on  the  terms  of  hiring  capital, 


142  POLITICAL    ECONOMY. 

which  is  manifested  toward  no  other  voluntary  con 
tracts,  they  have  been  vehemently  opposed  as  repug 
nant  both  to  policy  and  justice.  They,  however,  still 
retain  their  place  in  most  codes ;  and  the  questions 
which  still  present  themselves  are,  What  are  the  pre 
sent  effects  of  these  usury  laws,  and  what  would  be 
the  consequences  of  their  repeal  ? 

The  usury  laws  tend  in  several  ways  to  injure  the 
class  which  they  were  designed  to  serve.  In  the  first 
place,  they  lessen  the  amount  of  money  that  is  ready 
to  be  lent ;  many  persons  being  unwilling  either  to 
violate  or  evade  the  law,  who  therefore  seek  to  em 
ploy  their  capital  themselves  in  some  w^ay  that  pro 
mises  them  the  market  rate  of  interest,  rather  than 
to  lend  it  at  the  lower  legal  rate. 

But,  secondly,  when  a  lender  is  willing  to  incur 
the  risk  of  violating  the  law,  he  will  naturally  seek 
to  indemnify  himself  for  that  risk  by  requiring  a 
higher  rate  of  interest. 

Thirdly,  where  the  law  is  evaded,  as  it  commonly 
is,  by  various  roundabout  proceedings  devised  by  the 
combined  wit  of  borrowers  and  lenders,  the  borrower 
is  thus  subjected  to  additional  trouble,  and  probable 
loss,  which  he  might  avoid  if  he  could  directly  con 
tract  for  a  loan.  So  that,  upon  the  whole,  the  effect 
of  the  law  is  not  so  much  to  abolish  usury  as  to  make 
it  more  burdensome  to  the  debtor  class. 

It  seems  probable  that  the  law  is,  in  another  way, 
injurious  to  the  same  class.  The  sympathy  which 


CAPITAL.  143 

the  generality  of  mankind  have  ever  shown  for  debt 
ors,  and  the  odium  which  has  always  more  or  less 
attended  those  who  were  disposed  to  take  advantage 
of  their  necessities,  are  somewhat  strengthened  by 
the  law ;  and  thus  men  who  are  very  sensitive  as  to 
the  opinion  of  their  fellow-citizens  are  unwilling  to 
obtain  a  higher  rate  of  interest  than  the  law  allows, 
even  when  they  can  do  so  without  incurring  its  penal 
ties.  They  might,  for  instance,  buy  bonds  or  pro 
missory  notes  not  yet  due  at  a  discount  far  exceeding 
the  legal  interest.  This  practice,  which  is  very  fre 
quent  with  those  who  would  derive  a  large  profit 
from  their  moneyed  capital,  and  which  is  popularly 
called  shaving ,  though  it  infringes  no  law,  is  just  as 
odious  and  discreditable  as  direct  usury,  which  is 
illegal.  The  difficulty,  then,  of  obtaining  loans  is 
still  farther  increased  by  the  law. 

But  what  would  be  the  consequences  of  repealing 
the  usury  laws?  The  repeal  would  remove  restraints 
on  a  class  of  contracts  in  which  legislative  interposi 
tion  seems  to  be  no  more  required  than  in  any  other, 
and  so  far  it  would  tend  to  make  the  laws  consistent 
and  uniform.  It  would  also  take  away  the  induce 
ment  which  now  exists  for  one  who  has  borrowed 
money  at  usurious  interest  to  act  dishonorably,  by 
violating  his  own  solemn  engagements.  But  it  is  a 
mistake  to  suppose  that  it  would  greatly  increase  the 
loanable  money  of  the  community.  In  a  very  large 


144  POLITICAL     ECONOMY. 

majority  of  the  cases  of  money  lent  at  more  than 
legal  interest,  the  parties  resort  to  the  ready  expe 
dients  of  evading  the  usury  law,  which  merely  causes 
them  some  little  delay  and  trouble,  as  by  the  sale  of 
stock  or  merchandise  to  the  borrower,  on  a  credit, 
which  is  then  sold  by  him  at  a  reduced  price  for  cash ; 
or  by  the  borrower's  giving  his  bond  to  a  friend,  who 
then  sells  it  to  the'  money-lender  at  a  discount  for 
cash.  These  expedients,  and  many  others  for  escaping 
the  penalties  of  usury,  are  strictly  legal,  and  could 
not  be  prohibited  without  too  much  restricting  com 
mercial  intercourse. 

The  principal  effect,  then,  of  the  repeal  would  be 
to  make  such  evasive  shifts  and  contrivances  unne 
cessary,  and  to  allow  a  more  simple  and  direct  course 
of  procedure  between  the  borrower  and  lender,  with 
out  a  sensible  increase  in  the  amount  of  money  to  be 
lent,  or  in  the  facility  of  borrowing.  Hence  it  is  that 
whenever  the  experiment  of  repealing  the  usury  laws 
has  been  made,  as  has  been  done  in  several  of  the 
States,  the  public  has  been  disappointed  in  not  seeing 
the  expected  benefits,  and  the  repealing  law  has  been 
itself  repealed  before  its  effects  had  been  fairly  tested. 
It  is  not  improbable,  too,  that  such  repeals  have  been 
furthered  by  some  cases  of  exorbitant  usury,  which, 
being  then  first  openly  made,  shocked  men's  natural 
sense  of  justice ;  though  similar  contracts  may  have 
always  existed,  but  having  been  negotiated  in  secret, 


CAPITAL.  145 

were  known  only  to  the  parties ;  and,  it  might  be  that 
such  cases  of  extreme  improvidence  in  one  party,  and 
extreme  unconscientiousness  in  the  other,  might  have 
been  made  on  more  reasonable  terms,  if  the  parties 
had  waited  until  the  increased  competition  among  the 
class  of  lenders  had  adapted  the  money  market  to  the 
new  state  of  things.  It  may,  therefore,  be  wise  in 
legislatures,  in  repealing  the  usury  law,  to  postpone 
the  operation  of  their  act,  that  the  community  may 
prepare  for  the  chapge. 

The  injustice  which  the  usury  laws  do  to  the 
moneyed  class  is  greatly  mitigated  by  means  of  banks, 
insurance  companies,  and  other  joint-stock  associa 
tions,  the  price  of  whose  stock,  compared  with  their 
ordinary  dividends,  denotes  the  market  rate  of  interest 
with  tolerable  correctness.  Thus,  suppose  the  price 
of  a  share  of  stock  to  be  $80,  and  the  ordinary  divi 
dend  to  be  $6  per  annum;  the  purchaser  of  stock 
would  then  receive  7?  per  cent,  for  his  purchase- 
money.  Those  persons  who  have  unemployed  funds, 
but  cannot  use  them  in  any  profitable  employment 
which  requires  personal  attention,  by  reason  of  their 
age,  sex,  or  engrossing  occupations,  can  thus,  without 
labor  or  care,  obtain  the  current  rate  of  interest  by 
the  purchase  of  stock. 

Besides  the  variations  in  the  rate  of  interest,  ac 
cording  to  the  amount  lent,  and  the  duration  of  the 
loan,  there  is  also  a  difference  arising  from  the  char- 
13  K 


146  POLITICAL    ECONOMY. 

acter  of  the  employment.  When  that  is  low  and 
disreputable,  its  profits,  like  the  wages  of  labor,  must 
be  proportionally  higher.  But  the  chief  cause  of  the 
difference  in  the  rate  of  profit  is  the  difference  of  risk. 
Thus,  capital  vested  in  mining,  insurance  companies, 
and  in  untried  enterprises,  will  require  a  return  much 
larger  than  is  yielded  by  government  stocks,  the  profits 
of  which  are  not  precarious.  The  like  uncertainty, 
but  to  a  less  extent,  is  to  be  found  in  the  stocks  of 
banks  and  railroads.  But  the  power  which  banks 
possess  of  accommodating  their  stockholders  with 
large  loans,  when  the  use  of  money  is  unusually  pro 
fitable  or  desirable,  tends  to  enhance  the  value  of 
their  stock ;  and  that  of  railroads  consists  not  merely 
in  their  dividends,  but  also  in  the  effect  on  the  value 
of  the  neighboring  lands.  This  alone  is  often  a  suf 
ficient  compensation  to  many  of  the  stockholders. 

It  sometimes  has  been  asked,  what  is  the  minimum 
rate  to  which  the  interest  of  money  can  fall  ?  It  is 
clear  that  capital  cannot  increase  in  a  country,  unless 
the  whole  amount  annually  produced  exceeds  the 
amount  annually  consumed,  and  this  excess  must 
result  from  the  disposition  of  individuals  to  save 
being  greater  than  their  disposition  to  spend.  It 
seems  fair  to  presume  that  the  disposition  to  save 
will  diminish  with  the  decline  of  interest,  since  the 
desire  of  spending  for  present  gratification,  which 
would  be  overcome  by  one  rate  of  profit,  might  not 


CAPITAL.  147 

yield  to  an  inferior  profit,  and  thus  a  further  saving 
might  be  arrested. 

There  are,  indeed,  individuals  of  such  settled  habits 
of  frugality  and  aversion  to  expense,  that  they  would 
rather  save  than  spend,  though  they  were  to  receive 
no  additional  profit  whatever  from  their  savings. 
But  with  a  majority  of  the  community,  the  money 
saved  by  them  is  profitably  invested,  and  the  pros 
pect  of  this  profit  has  been  a  strong  incentive  to  their 
economy.  Let  this  hope  of  profit  be  taken  away,  or 
be  greatly  diminished,  and  the  desire  of  further  accu 
mulation  might  be  countervailed  by  the  pleasure 
of  spending  as  well  as  the  relaxation  of  industry, 
until  the  whole  amount  consumed  might  equal  the 
amount  produced,  when,  of  course,  interest  would  be 
stationary. 

At  what  rate  of  interest  this  resting-point  would 
be  reached,  is  a  question  which  has  yet  to  be  deter 
mined  ;  but  it  seems  probable  that,  if  interest  should 
ever  become  so  low  as  one  per  cent.,  or  even  be  much 
under  two  percent.,  further  accumulation  would  then 
be  arrested. 

There  are  circumstances  which  tend  to  retard  this 
result,  and  may  even  prevent  it.  Whenever  interest 
becomes  very  low  in  any  country,  capital  will  natu 
rally  find  a  vent  in  other  nations,  connected  with  it 
by  commercial  intercourse,  in  which  it  is  less  abun 
dant.  English  capital  is  thus  found  in  every  part  of 


148  POLITICAL    ECONOMY. 

the  United  States,  from  the  Atlantic  cities  to  the 
remotest  regions  of  the  West;  and  interest  might 
long  ago  have  reached  its  minimum  in  Holland,  if  its 
capital  had  not  found  employment  in  other  countries. 
We  will  now  proceed  to  consider  that  portion  of 
the  capital  of  a  country  which  consists  of  its  money. 


CHAPTER  XII. 

MONEY. 

THE  money  of  a  community  performs  very  import 
ant  functions,  and  has  laws  and  principles  of  its  own. 
It  is  characterized  by  a  degree  of  mobility  or  activity 
to  which  no  other  species  of  capital  can  approach. 
There  are  few  commodities  which  change  hands  more 
than  once  or  twice  in  passing  from  the  producers  to 
the  consumers,  where  they  disappear  and  terminate ; 
but  a  piece  of  money  or  coin  may  be  passing  from 
hand  to  hand  from  the  time  it  is  struck  off  at  the 
mint  until  it  is  worn  out ;  during  which  course  of 
circulation,  it  may  have  been  received  and  paid  away 
by  thousands,  and  traversed  more  miles  of  space  than 
would  encircle  the  globe.  In  treating  of  this  im 
portant  agent  in  all  civilized  countries,  we  will  succes 
sively  consider  its  origin,  its  functions,  and  its  laws. 

1.  As  to  its  origin.  Though  it  renders  most  essen 
tial  services  to  society,  especially  in  saving  time  and 
labor,  it  must  not  be  supposed,  as  has  sometimes 
been  done,  that  a  perception  of  these  benefits  has  led 
to  its  adoption.  This  is  no  more  the  case  than  that 
the  advantages  of  literature  caused  the  invention  of 
letters.  In  the  progress  of  society,  mankind  are 
13*  (149) 


150  POLITICAL     ECONOMY. 

gradually  led,  by  their  instinctive  wants  and  desires, 
to  the  discovery  and  adoption  of  what  will  afford 
gratification  to  those  wants  and  desires ;  and  they 
thus  occasionally  light  on  contrivances  and  expedients 
which  prove  to  possess  a  degree  of  utility  that  had 
never  been  foreseen. 

The  process  by  which  money,  or  a  common  medium 
of  exchange,  was  first  introduced,  seems  to  have  been 
as  follows :  At  first,  the  diversified  wants  of  indi 
viduals  would  lead  them  to  exchange  some  article 

C 

that  they  possessed  for  another  which  was  more  de 
sirable  to  them ;  and  by  such  exchange  each  party 
was  benefited,  or  received  more  value  than  he  parted 
with.  Hence  the  practice  of  barter,  which  we  find 
to  exist  in  the  rudest  stages  of  society.  But  its 
advantages  are,  in  the  nature  of  things,  very  circum 
scribed.  One  man,  wishing  to  exchange  cloth  for 
bread,  may  not  meet  with  one  who  possessed  bread 
and  wanted  cloth ;  another,  owning  a  horse,  might 
wish  to  exchange  him  for  several  articles  which  no 
single  individual  was  likely  to  possess,  and  the  horse 
could  not  be  parcelled  out  among  all  those  who  had 
the  articles  he  wanted.  These,  and  the  like  difficul 
ties,  in  the  practice  of  barter,  would  naturally  induce 
men,  when  they  could  not  by  exchange  obtain  the 
precise  article  they  wanted,  to  seek  that  commodity 
which  was  in  most  general  request,  and  which  could 
be  kept  without  loss  or  deterioration.  In  this  way, 
by  degrees,  some  species  of  property  would  become 


MONEY.  151 

more  generally  desired,  until  it  became  a  common 
medium  of  exchange,  or  money.  Thus,  in  pastoral 
nations — the  first  in  which  men  began  to  accumulate 
property — cattle  and  sheep  became  a  currency;  and 
money  is  thought  to  have  borrowed  its  name,*  in 
some  languages,  from  this  circumstance.  These  ani 
mals,  being  fed  by  natural  pastures,  could  be  kept 
not  only  without  loss,  but  with  positive  gain,  arising 
from  their  growth  and  their  multiplication,  as  well 
as  their  milk.  When  Kentucky  was  first  settled,  and 
steam  had  not  yet  facilitated  the  navigation  of  the 
Mississippi,  cattle,  horses,  and  hogs  afforded  the  only 
means  of  traffic  with  the  Atlantic  region.  They  were 
accordingly  received  by  the  country  merchant  in 
exchange  for  his  goods ;  and  when  he  had  become 
possessed  of  enough  to  make  a  drove,  they  were 
transported  on  foot  to  the  Atlantic  States  with  more 
celerity  and  at  a  less  expense  than  any  other  species 
of  property.  Other  commodities  have  in  like  man 
ner  grown  up  to  be  the  currency  in  other  countries, 
as  the  grains  of  cocoa  in  Mexico,  salt  and  slaves  in 
Africa,  etc. 

But  no  articles  whatever  have  so  generally  recom 
mended  themselves  to  the  adoption  of  mankind  for 
the  purpose  of  money  as  silver  and  gold;  and  we 
find  evidence  in  the  Bible  that  thousands  of  years 
ago  those  metals  were  the  common  measures  of  value 
and  the  general  mediums  of  exchange. 

*  As  in  pecunia,  from  pecus. 


152  POLITICAL    ECONOMY. 

We  see  the  source  of  this  superiority  in  the  quali 
ties  they  possess.  In  the  first  place,  it  was  important 
that  they  should  have  intrinsic  value  in  the  eyes  of 
mankind,  and  this  they  possess  in  their  brilliancy 
and  beauty  —  they  being  by  all  classes  of  men, 
whether  rude  or  civilized,  prized  as  personal  orna 
ments.  Their  unequalled  lustre  gives  an  excitement 
and  gratification  to  the  sense  of  vision  that  is  given 
by  nothing  else  except  the  precious  stones,  which,  for 
the  same  reason,  have  always  been  highly  valued  by 
mankind.  Besides  this  fundamental  quality  of  being 
desirable  for  their  own  sake,  their  exchangeable  value 
was  increased  by  their  scarcity,  and  the  labor  of  pro 
curing  them.  Nature  has  been  very  profuse  in  her 
production  of  iron,  lead,  and  copper,  but  very  sparing 
in  that  of  gold  and  silver ;  and  to  their  consequent 
extraordinary  value  in  the  market  they  owe  their 
portability,  by  which  they  can  be  transmitted  to  a 
great  distance  at  little  comparative  cost,  and  serve  to 
defray  the  expenses  of  travel  in  remote  countries. 

Another  advantage  of  these  metals  is  their  uni 
formity.  One  piece  of  gold,  wherever  found,  has  the 
vsame  specific  gravity,  the  same  malleability  and  duc 
tility,  and  nearly  the  same  color,  as  every  other 
piece.  So  as  to  silver.  They  are  also  capable  of 
being  divided  into  small  portions,  to  suit  different 
degrees  of  value ;  and  those  portions  can  be  at  plea 
sure  reunited  into  a  homogeneous  mass  by  melting. 
Another  recommendation  of  these  metals  is  that  they 


MOXEY.  153 

are  not  liable  to  change,  especially  gold ;  most  other 
metals  being  more  or  less  acted  on  by  air  or  water, 
so  as  to  oxidate  or  rust.  There  are  numerous  coins 
in  the  collections  of  the  curious  which  were  struck 
two  thousand  years  ago,  and  are  apparently  un 
changed.  And  lastly,  they  are  capable  of  receiving 
an  impression,  by  being  moulded  or  stamped,  so  that 
they  can  be  readily  identified,  and  their  exchangeable 
value  known  by  inspection. 

The  utility  of  these  metals  for  ornament  is  greatly 
augmented  by  their  being  malleable  into  leaves  of 
extreme  thinness,  so  that  with  a  small  portion  a 
great  surface  can  be  covered  over.  An  ounce  of  gold, 
when  beaten  into  leaf,  would  gild  166  square  feet  of 
surface.  In  like  manner,  it  may  be  drawn  into  wire 
so  small  as  to  be  scarcely  discernible  to  the  naked 
eye. 

By  reason  of  these  recommendations,  gold  and 
silver  are  used  for  money  in  every  quarter  of  the 
world ;  and  one  or  both  are  made  the  standard  of  the 
value  of  everything  else. 

In  countries  in  which  those  metals  are  neither  pro 
duced  nor  can  be  obtained  by  commerce  in  sufficient 
abundance,  various  substitutes  for  a  currency  have 
been  resorted  to.  Thus,  in  the  early  settlement  of 
the  British  colonies  on  this  continent,  where  gold 
and  silver  were  scarce,  substitutes  were  found  in 
commodities  which  were  extensively  used  in  com 
merce.  Tobacco  was  thus  used  in  Virginia  and 


154  POLITICAL    ECONOMY. 

Maryland,  fish  in  New  England,  rice  in  South  Caro 
lina,  and  in  most  of  those  colonies  a  paper  currency, 
consisting  of  written  engagements  by  the  colonial 
governments  to  pay  money,  which  were  receivable 
for  all  dues  at  the  public  treasury. 

2.  The  useful  functions  of  money  are  very  great  in 
all  civilized  countries.  It  can  be  accommodated  to 
all  exchanges,  whether  of  small  or  large  amount ;  and 
it  thus  saves  the  time  and  labor  which  would  be  re 
quired  by  the  circuitous,  tedious,  and  imperfect  pro 
cess  of  barter.  It  encourages  productive  industry, 
by  enabling  a  manufacturer,  by  a  single  exchange,  or 
set  of  exchanges,  to  dispose  of  his  fabrics  in  large 
quantities ;  and  as  some  have  money,  which,  from 
their  age,  their  sex,  or  their  other  occupations,  they 
cannot  personally  manage,  while  there  are  others  who 
possess  the  enterprise  and  capacity  for  employing  it 
profitably,  it  can  be  transferred  from  one  to  the  other, 
to  the  advantage  of  both  parties. 

Money  also  gives  great  facilities  to  governments  in 
the  collection  of  their  revenue,  which  would  be  other 
wise  collected  in  bulky  articles;  transported  at  a 
great  expense,  and  be  liable  to  waste,  injury,  and 
peculation.  There  would  be  the  same  advantage  in 
disbursing  the  revenue  as  in  collecting  it;  and  lastly, 
it  enables  one  country  to  pay  its  debts  to  another,  in 
their  commercial  intercourse,  by  a  commodity  of  uni 
versal  circulation,  which  can  be  transported  with 
more  safety,  and  at  less  expense,  than  any  other. 


MONEY.  155 

The  useful  offices  of  money  are  indeed  so  great  and 
so  various,  that  it  would  seem  impossible  for  a  com 
munity  to  execute  the  complicated  and  diversified 
purposes  of  civilized  life  without  such  a  general  me 
dium  of  exchange. 

Though  the  functions  of  money  are  of  such  import 
ance,  yet,  as  its  materials  are  very  costly,  it  is  desirable 
to  have  as  little  of  it  as  will  suffice  to  perform  its 
useful  purposes.  To  have  twice  as  much  money  in  a 
community  as  its  circumstances  require,  is  as  unwise 
as  to  have  an  hundred  wagons  for  transport  when  fifty 
would  be  sufficient ;  or  two  bridges  to  cross  a  stream 
at  the  same  place. 

The  quantity  of  money  required  in  a  country  de 
pends  partly  on  the  value  of  the  money,  and  partly 
on  the  number  and  amount  of  its  ordinary  exchanges. 

The  value  of  the  precious  metals,  like  that  of  other 
products  of  human  industry,  depends  on  the  cost  of 
procuring  them ;  and,  from  their  natural  scarcity, 
their  value  has  been  always  very  high,  in  proportion 
to  their  bulk,  and  that  value  is  uniform  at  the  same 
time  and  place.  But  it  varies  very  greatly  in  different 
ages  and  in  different  countries.  Thus,  it  has  gene 
rally  been  considered  that  the  discovery  of  America, 
by  reason  of  the  unwonted  richness  of  its  mines, 
lowered  the  value  of  those  metals  from  one-third  to 
one-fourth  of  their  previous  value;  and  the  recent 
discoveries  of  gold  in  California  and  Australia  seem 


156  POLITICAL    ECONOMY. 

destined  to  lower  the  value  of  that  metal  —  to  what 
extent  will  be  hereafter  considered. 

These  metals  have  also  very  different  values  in  dif 
ferent  places.  The  principal  cause  of  this  diversity 
is  the  difference  of  distance  from  the  most  productive 
mines — the  value  increasing  with  the  distance.  They 
are  thus  dearer  in  Europe  than  America,  and  in  Asia 
than  in  Europe. 

It  might  seem  at  first  that,  when  a  commodity  con 
tains  so  much  value  in  a  small  bulk  and  weight  as 
gold,  its  transportation  would  be  proportionally  cheap, 
and  that  the  cost  of  carriage  could  not  add  much  to 
its  value.  Thus,  100  pounds  of  gold  would  be  worth 
about  $20,000,  the  freight  of  which,  3000  miles  by 
water,  would  not  be  more  than  $2,  and  by  railroad 
about  thrice  as  much.  The  insurance  and  other 
charges  would  scarcely  exceed  the  half  of  one  per 
cent.  Let  us,  however,  suppose  the  whole  expense 
of  transport  to  be  $200.  This  would  be  but  one  per 
cent,  of  the  value  of  the  gold,  which  seems  to  indicate 
that  such  value  must  be  nearly  the  same  at  a  distance 
of  3000  miles  from  the  mines  as  at  the  mines  them 
selves.  But  it  must  be  recollected  that  the  gold,  thus 
transmitted  to  a  distant  country,  must  be  purchased 
by  the  products  of  that  country ;  and  that  these  being 
probably  of  great  bulk  compared  with  their  value, 
the  cost  of  their  transport  is  proportionally  high; 
and  that  the  payment  of  this  expense  is  an  indispen 
sable  prerequisite  to  the  transfer  of  the  gold  from  the 


MONEY.  157 

mines.  It  must,  therefore,  be  added  to  the  cost  of 
the  gold  in  the  distant  country.  Besides,  if  the 
mining  country  produces  little  else  for  foreign  ex 
change  than  gold,  as  is  sometimes  the  case,  then  the 
cost  of  the  gold  transported  must  be  enhanced  by  the 
expense  of  two  voyages. 

Another  circumstance  which  influences  the  quan 
tity  of  these  metals  in  each  country  is  its  wealth. 
Rich  countries  having  more  exchanges  to  make,  and 
to  a  larger  amount,  require  more  gold  and  silver  than 
poor  ones. 

The  substitution  of  paper  money  for  specie,  and 
other  expedients  for  economising  the  use  of  the  pre 
cious  metals,  has  a  tendency  to  diminish  their  amount. 
This  circumstance  in  England  may  tend  as  much  to 
lessen  its  specie  currency  as  its  great  wealth  tends  to 
increase  it. 

The  combined  influence  of  all  these  circumstances 
is  shown  in  the  amount  of  gold  and  silver  required 
by  each  country  in  proportion  to  its  population.  In 
Great  Britain,  the  amount  to  each  inhabitant  is  about 
$16.  In  France,  where  bank  paper  is  much  less 
used,  but  where  there  has  not  been  as  great  an  accu 
mulation  of  wealth  as  in  England,  it  is  $12.  In  the 
other  parts  of  Europe,  it  is  much  less.  In  the  United 
States,  supposing  their  present  population  to  be  thirty 
millions,  it  is  about  $8.  It  is  much  reduced  by  the 
very  extensive  use  of  bank  paper. 

The  quantity  of  money  wanted  in  a  country,  being 
14 


158  POLITICAL     ECONOMY. 

in  proportion  to  the  amount  of  its  exchanges,  is 
affected  by  various  circumstances.  Thus,  where  land 
is  a  common  subject  of  traffic,  as  it  is  in  most  parts 
of  the  United  States,  more  money  is  required  on  that 
account  than  in  countries  where  it  seldom  changes 
hands,  as  in  most  parts  of  Europe.  In  slaveholding 
countries,  too,  so  large  an  addition  to  the  exchange 
able  property  requires  an  addition  to  their  currency. 
This  circumstance  adds  to  the  money  required  in  the 
Southern  States,  but  it  is  probably  more  than  coun 
terbalanced  by  the  general  practice  of  the  agricultural 
class  in  dealing  with  their  merchants  on  credit,  and 
settling  their  accounts  but  once  a  year.  It  is  not 
uncommon  there  for  men  whose  annual  expenses  are 
from  two  to  three  thousand  dollars,  but  who  rarely 
have  by  them  more  than  an  hundred  dollars  in 
specie. 

In  the  fluctuations  to  which  the  circulating  money 
of  a  country  is  subject,  it  sometimes  has  an  excess 
beyond  what  the  exchanges  of  the  community  actu 
ally  require,  and  sometimes  a  deficiency,  both  of 
which  have  their  inconveniences.  When  there  is  a 
redundancy  of  money,  its  value  naturally  falls,  and 
the  prices  of  other  commodities  rise,  which  is  injuri 
ous  to  the  foreign  trade.  It  is  also  detrimental  to 
the  class  of  creditors,  and  advantageous  to  the  debt 
ors.  It  does  mischief,  too,  by  presenting  the  delusive 
appearance  of  a  rise  in  the  value  of  property,  which 
sometimes  leads  to  an  increased  expenditure,  and, 


MONEY.  159 

what  is  worse,  engenders  a  spirit  of  speculation.  The 
natural  corrective  of  the  evil  is  the  export  of  the 
excess  of  specie  to  foreign  countries. 

The  deficiency  of  circulating  medium  produces  for 
the  time  more  sensible  mischief.  It  checks  all  useful 
enterprise,  and  often  suspends  the  operations  of  pro 
ductive  industry.  The  manufacturer,  not  meeting 
with  the  customary  vents  for  his  fabrics,  is  obliged  to 
discharge  his  workmen,  and  to  stop  his  purchases  of 
raw  materials.  The  wheels  of  commerce  all  move 
slowly  and  heavily,  or  stop  altogether.  Imports  are 
discouraged,  and  it  is  only  by  the  stimulus  which  low 
prices  give  to  the  export  trade  that  this  evil  can  be 
remedied  by  the  import  of  specie.  It  greatly  im 
pedes,  and  sometimes  totally  arrests,  the  collection  of 
debts,  by  making  their  pressure  so  much  more  heavy; 
and  it  is  thus  an  evil  both  to  debtors  and  creditors. 

This  evil  is  commonly,  in  the  United  States,  the 
consequence  of  too  heavy  importations  of  foreign 
goods ;  which,  when  not  attended  or  closely  followed 
by  an  adequate  amount  of  exports,  the  deficiency  is 
paid  in  specie,  which,  being  principally  drawn  from 
the  banks,  compels  them  either  to  suspend  cash  pay 
ments  or  to  call  in  much  of  what  they  had  previously 
lent ;  thus,  in  either  case,  occasioning  embarrass 
ments  and  difficulties  that  are  felt  by  all  classes. 

It  is  not,  however,  correct  to  suppose,  as  has  been 
done  by  those  who  reason  in  political  economy  as  if 
it  were  a  mathematical  instead  of  a  moral  science, 


160  POLITICAL    ECONOMY. 

that  the  value  of  the  circulating  specie  rises  or  falls 
in  full  proportion  to  its  excess  or  deficiency.  Thus, 
suppose  the  amount  of  such  specie  to  be  suddenly 
doubled,  its  value  would  not  therefore  sink  to  one- 
half.  By  the  force  of  habit,  a  man  would  not  soon 
give  $200  for  a  horse,  or  an  acre  of  land,  which  had 
previously  sold  for  $100.  A  part  of  the  excess 
would,  indeed,  be  balanced  by  depreciation;  but  a 
part,  also,  would  be  inoperative,  by  reason  of  a  larger 
amount  of  idle,  unemployed  money,  and  by  many 
purchases  being  now  made  for  cash  which  had  before 
been  made  on  credit.  Individuals  would  carry  in 
their  pockets,  and  banks  retain  in  their  vaults,  specie 
to  a  larger  amount  in  value  than  before. 

In  like  manner,  if  the  circulating  specie  was  re 
duced  to  one-half,  the  consequence  would  be,  not  a 
duplication  of  its  value,  but  a  part  of  the  deficiency 
would  be  counterbalanced  by  an  increase  of  sales  on 
credit  instead  of  for  cash,  together  with  a  diminution 
of  the  deposits  in  the  banks  and  in  the  hands  of  indi 
viduals,  and  the  residue  in  the  reduction  of  nominal 
prices,  and  the  rise  in  the  value  of  the  precious  me 
tals.  As  to  the  prices  of  commodities,  there  would 
be,  whether  in  the  case  of  deficiency  or  of  excess,  a 
great  difference  in  different  articles.  Of  those  com 
modities  which  find  their  market  in  foreign  countries, 
the  prices  at  home  would  be  governed  by  the  prices 
abroad.  But  the  principal  effect  of  the  change 
would  be  confined  to  the  prices  of  land  and  of  those 


MONEY.  161 

domestic     products    which    find    their    market    at 
home. 

The  better  to  fit  the  precious  metals  to  perform 
the  offices  of  currency,  governments  have  coined 
them  into  pieces  adapted  to  popular  use.  They  have 
with  jealous  rigor  reserved  to  themselves  the  exclu 
sive  right  of  coining,  which  has  ever  been  regarded  as 
an  appropriate  and  important  function  of  sovereignty. 

The  following  are  the  principal  regulations  of  the 
United  States  mint.  It,  in  the  first  place,  determines 
the  weight,  varieties,  and  relations  of  the  different 
coins.  By  way  of  securing  the  advantages  of  the 
decimal  arithmetic  in  all  reckonings  of  money,  every 
coin  is  ten  times  the  value  of  another  below  it.  Thus, 
an  eagle  is  equal  in  value  to  ten  dollars,  a  dollar  to 
ten  dimes,  a  dime  to  ten  cents,  and  a  cent  to  ten 
mills.  But  it  has  been  found,  both  in  this  country 
and  in  France,  that  mankind  naturally  prefer  the 
binary  divisions  of  halves,  quarters,  eighths,  and 
sixteenths ;  and,  though  the  monetary  system  of  the 
United  States  has  been  in  operation  more  than 
seventy  years,  the  people  have  never  adopted  the 
prescribed  currency  farther  than  to  keep  their  ac 
count  sin  dollars  and  cents, — which,  moreover,  is  not 
universal, — or  been  induced  to  dispense  entirely  with 
the  use  of  the  eighths  and  sixteenths  of  a  dollar  of 
the  Mexican  coinage.  The  Government  has  also 
deemed  it  expedient  to  accommodate  the  popular  pre 
ference  by  coining  halves  and  quarters  of  the  dollar. 
14*  L 


162  POLITICAL     ECONOMY. 

In  all  coins  of  silver  or  gold,  some  alloy  of  base 
metal  is  mingled,  for  two  reasons :  one  is  that  the 
wear  of  the  coin  is  thereby  lessened  —  and  the  other 
is,  that  since  those  metals  are  scarcely  ever  found 
perfectly  pure,  the  practice  saves  the  necessity  of  re 
fining  them  to  extreme  purity,  which  would  be  often 
an  expensive  as  well  as  nice  operation. 

In  some  countries  the  cost  of  coinage  is  defrayed 
by  the  government ;  while  in  others,  it  is  paid  for  by 
those  who  bring  bullion  to  the  mint  to  be  coined,  and 
the  charge  is  called  a  seignorage.  This  charge  is  per 
fectly  proper  and  just,  there  being  no  more  reason 
why  the  government  should  render  this  service  gra 
tuitously  than  any  other.  It  is  further  recommended 
by  policy  as  well  as  justice.  When  the  coinage  is 
gratuitous,  the  coins  being  then  of  no  more  value 
than  an  equal  weight  of  bullion,  are  as  readily  melted 
up  by  the  manufacturer,  or  exported  by  the  merchant, 
as  the  same  amount  of  bullion,  and  the  expense  and 
loss  from  coinage  are  thus  augmented.  But  when 
money  is  subjected  to  a  seignorage,  it  being  worth 
more  in  the  country  where  it  wras  coined  than  it  is 
abroad,  the  loss  on  exporting  it  tends  to  prevent  its 
exportation ;  and  even  when  it  is  exported,  the  same 
circumstance  will  often  occasion  it  to  be  returned  to 
the  country  where  it  is  most  valuable. 

There  is  another  important  diversity  among  nations 
as  to  money.  Some  make  silver,  others  gold,  and 
others  again  both  metals,  standards  of  value  and  legal 


MONEY.  163 

tenders  for  debts.  Without  doubt  each  metal  has  its 
peculiar  advantages  as  a  currency.  Silver  is  the  best 
for  small  values,  while  gold  is  far  more  convenient 
for  large  payments.  But  the  policy  of  having  two 
standards  of  value  does,  in  fact,,  often  deprive  a  com 
munity  of  one  of  the  two  species  of  currency  which  it 
was  intended  to  secure.  When  both  gold  and  silver 
are  made  standards  of  value  and  legal  tenders  for 
debts,  the  law  must  determine  their  relative  values. 
But  the  relative  values  of  these  metals,  like  those  of 
all  other  commodities,  is  liable  to  change,  and  when 
ever,  in  these  occasional  fluctuations,  the  market  value 
differs  from  the  legal,  the  undervalued  metal  is  sure 
of  being  that  kind  of  specie  which  is  sent  abroad,  and 
is  also  likely  to  be  sent  to  the  melting-pot  of  the 
manufacturer,  until  it  disappears  from  circulation. 
Besides,  when  the  undervalued  metal  is  neither  melted 
nor  exported,  it  is  likely  to  be  either  hoarded  or  to 
command  a  premium  in  the  market,  either  of  which 
supposes  it  to  be  not  in  general  circulation. 

When  the  mint  was  first  established  in  1791,  the 
law  estimated  gold  at  fifteen  times  the  value  of  silver. 
This  being  found  to  rate  gold  too  high  and  silver  too 
low,  whenever  money  was  to  be  sent  hither,  gold  was 
preferred,  while  silver  was  preferred  for  export ;  the 
consequence  was,  an  inadequate  supply  of  silver,  so 
that  it  generally  commanded,  for  large  sums,  a  pre 
mium  of  5  per  cent.  Some  years  afterwards,  gold 
gradually  rose  in  price,  so  as  to  be  worth  more  than 


1G4  POLITICAL    ECONOMY. 

fifteen  times  as  much  as  silver,  and  then  it  com 
manded  a  premium  —  the  eagles  first  coined  readily 
selling  for  half  a  dollar  more  than  their  value  by  law. 
Congress  subsequently  raised  the  price  of  gold  to 
sixteen  times  the  value  of  silver,  but  the  California 
mines  have  reduced  its  price ;  and,  to  replace  the 
silver  currency  which  had  been  previously  banished 
from  circulation  by  reason  of  its  being  valued  too  low, 
a  new  issue  has  been  made  of  silver,  with  a  degree 
of  alloy  sufficient  to  counterbalance  the  recent  depre 
ciation  of  gold.  It  seems  to  be  a  mistake  to  suppose, 
as  the  legislature  probably  did,  that  it  is  necessary  to 
make  both  metals  legal  tenders  to  secure  the  circula 
tion  of  both.  They  are  so  universally  prized,  that  if 
they  were  coined  into  pieces  of  convenient  size,  either 
of  them  will  be  readily  taken  as  money,  whether 
made  a  legal  tender  or  not.  This  fact  has  been  more 
than  once  evinced  in  the  United  States,  where  foreign 
coins  have  always  had  a  ready  currency,  though  they 
have  sometimes  not  been  a  legal  tender,  but  also  in 
bank  notes,  which  have  never  been  a  legal  tender  in 
any  State,  but  which  constitute  the  principal  currency 
in  all  of  them.  It  then  is  not  merely  an  absurdity 
in  theory  to  have  two  standards  whose  relative  values 
are  always  liable  to  change,  but  a  policy  that  is  prac 
tically  injurious.  Besides  silver  and  gold,  copper  is 
generally  coined  for  the  payment  of  small  sums,  since 
even  a  silver  coin  of  the  value  of  a  cent  would  be  too 
small  for  use.  In  the  United  States  the  copper  coins 


MONEY.  165 

have  undergone  several  changes.  They  now  are 
rated  so  much  beyond  the  value  of  the  metal,  that 
they  yield  a  considerable  profit  to  the  government. 

It  is  a  yet  more  important  proposition  that  the 
value  of  these  metals  is  liable  to  change,  when  com 
pared  with  that  of  other  commodities.  Whenever 
they  are  procured  with  more  ease,  and  become  more 
abundant,  they  must  obey  the  universal  law,  and 
become  proportionally  cheaper.  The  discovery  of 
America,  where  mines  of  unprecedented  richness  were 
found,  was  believed  to  have,  in  the  course  of  time, 
lowered  gold  to  one-third  of  its  former  price,  and  silver 
to  one-fourth ;  and  the  recent  discoveries  of  gold  in 
Siberia,  California,  and  Australia,  have  already  pro 
duced  a  fall  in  the  value  of  that  metal,  and  are  likely 
to  produce  a  much  greater.  Such  a  fall  is  very  im 
portant  in  its  consequences.  In  all  countries  in  which 
gold  is  a  legalized  currency,  its  depreciation  lessens 
the  real  amount  of  debts,  and  is  so  far  an  injustice  to 
creditors.  It  virtually  reduces  the  amount  of  all 
national  debts,  and  lessens  all  incomes  derived  from 
money,  or  from  that  which,  like  the  shares  of  joint- 
stock  companies,  has  only  a  monetary  value. 

If  the  whole  amount  of  gold  annually  produced 
exceeds  the  amount  annually  consumed,  it  must  ne 
cessarily  decline  in  value,  and  it  becomes  desirable  to 
know  the  extent  of  the  depreciation. 

The  quantity  of  gold  now  annually  drawn  from 
the  mines  is  estimated  at  two  hundred  millions  of 


166  POLITICAL     ECONOMY. 

dollars;  and,  from  present  appearances,  there  is  no 
reason  to  expect  that  the  production  will  soon  dimi 
nish.  The  annual  consumption  of  this  metal  may 
be  ranged  under  four  principal  heads:  1.  Coining; 
2.  Manufactures  and  the  arts;  3.  Wear  and  tear; 
4.  Losses  at  sea.  We  will  briefly  notice  each  of 
them. 

1.  Coining.  The  quantity  of  gold  used  in  this 
way  has  of  late  greatly  increased.  In  consequence 
of  the  abundant  supply  derived  from  California  and 
Australia,  this  metal  enters  more  largely  into  the 
currency  of  those  countries  where  the  previous  circu 
lation  had  been  principally  of  silver.  This  has  been 
the  case  in  France,  where  gold  has  taken  the  place 
of  silver  to  the  amount  of  several  hundred  millions 
of  dollars.  In  the  United  States  also,  where  silver 
was  formerly  the  principal  currency,  gold  has  been 
extensively  substituted,  so  as  to  have  probably  in 
creased  it  from  less  than  ten  millions  of  dollars  to 
more  than  two  hundred  millions. 

But  coinage  will  not  add  to  the  present  consump 
tion  of  gold  beyond  what  will  be  required  to  meet 
the  increase  of  traffic  consequent  on  the  increase  of 
population  and  wealth.  The  whole  amount  of  gold 
currency  in  the  civilized  world  is  estimated  at  about 
fifteen  hundred  millions  of  dollars ;  and  supposing  the 
annual  increase  of  wealth  to  be  five  or  six  per  cent,  a 
year,  —  a  very  liberal  estimate,  —  the  yearly  addition 
to  the  gold  currency  cannot  exceed  ninety  millions. 


MONEY.  167 

2.  The  consumption  in  manufactures  and  the  arts. 
Gold  is  used  so  extensively  in  the  manufacture  of 
watch-cases,  jewelry,  trinkets,  and  in  gilding,  that  it 
is  not  easy  to  estimate  its  consumption  in  this  way. 
In  France  the  annual  consumption  is  computed  to  be 
twenty  millions  of  francs  —  nearly  four  millions  of 
dollars.     Supposing  the  population  of  Europe  to  be 
eight  times  that  of  France,  and  its  consumption  of 
gold  to  be  at  half  the  rate,  in  proportion  to  numbers, 
the  whole  annual  European  consumption  of  gold  in 
this  way  would  be  sixteen  millions ;  which,  by  add 
ing  two  millions   for  the  consumption  of  America, 
would  be  eighteen  millions. 

3.  The  wear  and  tear  of  gold  in  coin,  ornaments, 
and  utensils.     The  whole  amount  of  gold  vested  in 
these  several  ways  has  been  computed  at  three  thou 
sand  millions  of  dollars.     The   estimated   rates  of 
wear  and  tear  vary  greatly  in  different  classes  of 
objects.     In  coins  of  general  circulation,  the  annual 
loss  has  been  reckoned  at  from  a  four-hundredth  to  a 
thousandth  part.     In  some  articles  of  jewelry  it  may 
be  as  much ;  but  in  many  more  it  is  insignificant.    If 
we    suppose    it  to  be  a  five-hundredth   part  of  the 
whole  amount,  the  annual  consumption   from    this 
source  would  be  six  millions  of  dollars. 

4.  Losses  at  sea,  etc.    The  amount  of  these  is  still 
more  uncertain ;  but,  supposing  it  to  be  five  millions 
annually,  the  total  consumption  would  then  be  — 


168  POLITICAL     ECONOMY. 

For  additional  coinage $90,000,000 

Manufactures  and  the  arts 18,000,000 

Wear  and  tear 6,000,000 

Losses  at  sea,  etc 5,000,000 


Total $119,000,000 

If,  then,  we  estimate  the  present  annual  consump 
tion  at  one  hundred  and  twenty  millions,  it  is  little 
more  than  half  the  computed  annual  production,  and 
a  fall  in  the  value  of  gold  must  be  the  inevitable 
consequence. 

But  it  is  not  more  certain  that  depreciation  will  be 
the  consequence  of  the  excess  of  production  over 
consumption,  than  that  such  depreciation  would  be 
followed  by  two  effects  —  a  diminution  of  the  supply, 
and  an  increase  of  the  demand.  First,  as  to  the  sup 
ply:  however  the  gold  maybe  procured, — whether 
by  washing  or  mining,  —  there  must  be  a  gradation 
in  the  productiveness  of  the  labor  and  capital  em 
ployed  in  obtaining  it ;  and  supposing  it  to  decline  in 
value  ten  or  fifteen  per  cent.,  then  the  labor  and 
capital  which  could  not  bear  that  reduction  would  be 
thrown  out  of  employment,  and  the  quantity  pro 
duced  be  proportionally  diminished.  And  secondly, 
an  increased  consumption  would  as  certainly  follow 
in  coining  and  manufactures.  Thus,  by  this  twofold 
effect  of  depreciation,  the  supply  and  the  demand  of 
gold  —  that  is,  its  production  and  consumption  — 
would  finally  be  equal,  and  balance  each  other,  when 
depreciation  would  cease. 


MONEY.  169 

The  rate  at  which  the  excess  of  production  over 
consumption  would  produce  depreciation  would  de 
pend  on  the  proportion  which  such  excess  bore  to  the 
quantity  of  coin  previously  circulating  in  the  com 
mercial  world.  This  quantity,  before  the  discovery 
of  the  Californian  and  Australian  mines,  was  sup 
posed  to  be  about  five  hundred  millions  of  dollars  — 
now  increased  to  nine  hundred  millions.  If,  then, 
the  annual  excess  of  production  over  consumption  is 
sixty  millions,  then  the  annual  depreciation  ought  to 
be  6S  per  cent.  But  this  estimate  would  be  ever 
liable  to  be  affected  by  variations  in  the  supply  and 
the  demand,  so  that  time  alone  can  give  the  true  and 
precise  solution  of  the  problem. 

The  consumption  or  employment  of  the  precious 
metals  for  money  is  greatly  diminished  by  the  substi 
tution  of  paper  currency,  by  which  communities  have 
been  able  to  save  a  large  amount  of  expense,  for  the 
purchase  of  such  costly  materials  as  gold  and  silver; 
and  of  all  the  modes  of  providing  this  substitute, 
none  have  been  found  so  safe  and  efficient  as  the 
promissory  notes  of  banks — which  we  will  now  con 
sider. 


15 


CHAPTER    XIII. 

BANKS. 

Or  these  institutions  there  are  two  kinds :  banks 
of  deposit^  and  banks  of  circulation.  Of  the  first 
kind,  there  are  but  few  examples.  The  most  cele 
brated  bank  of  this  description,  though  not  the  ear 
liest,  was  the  Bank  of  Amsterdam,  which,  in  conse 
quence  of  the  inconvenience  of  the  various  kinds  of 
foreign  money  that  found  their  way  thither  when 
Holland  carried  on  commerce  with  all  parts  of  the 
world,  was  established  to  receive  these  foreign  coins 
on  deposit  at  their  fair  value ;  and  the  receipts  for 
these  deposits,  issued  by  the  bank,  passed  from  hand 
to  hand  as  a  currency  of  undoubted  credit,  and  com 
manded  an  agio  or  premium,  in  lieu  of  the  foreign 
coins  deposited ;  and,  as  there  was  some  small  deduc 
tion  or  loss  in  drawing  out  the  money  from  the  bank, 
it  was  scarcely  ever  done.  The  gold  and  silver  was 
consequently  long  steadily  increasing,  until  at  length 
it  was  found  that,  after  these  deposits  had  been  faith 
fully  kept  for  some  centuries,  the  bank  had  been 
tempted  to  lend  out  much  of  this  idle  treasure  to 
great  corporations,  to  relieve  them  from  pecuniary 
difficulty,  which  loans  they  never  found  it  convenient 

(HO) 


BANKS.  171 

to  repay.     The  subsequent  discovery  of  these  facts 
destroyed  the  credit  of  the  bank,  and  the  bank  itself. 
The  example  has  been  rarely  imitated;  and  there 
is,  perhaps,  no  case  now  existing  of  a  bank  of  mere  ' 
deposits. 

Banks  of  circulation,  which  have  been  since  adopted, 
are  of  very  great  commercial  importance,  both  by 
their  functions  and  their  number. 

They  are  commonly  created  by  a  charter  from  the 
government,  for  which  they  pay  a  fixed  or  an  annual 
sum.  Being  possessed  of  a  large  capital,  on  the  credit 
of  this  they  are  enabled  to  circulate  their  own  pro 
missory  notes  as  a  currency.  Since  their  notes  are 
redeemable  in  gold  or  silver  on  demand,  they  obtain 
a  ready  circulation,  and  are  often  preferred  to  specie, 
from  their  greater  portability,  the  greater  safety  and 
care  with  which  they  can  be  transferred  from  place 
to  place,  and  the  saving  of  time  in  counting  large 
sums. 

It  is  in  this  substitution  of  their  paper  for  gold  and 
silver  that  the  bank  finds  its  profit,  and  the  public 
its  advantage ;  since  the  banks  receive  the  same  inte 
rest  for  their  notes  as  for  specie,  and  the  public  is  a 
gainer  by  the  substitution  of  so  cheap  an  article  as 
paper  for  the  precious  metals. 

Banks  of  circulation  are  also  banks  of  deposit — they 
being  the  safest  depositories  of  money  of  all  kinds, 
whether  of  paper  or  specie. 

They  are  also  banks  of  discount ;  that  is,  they  ad- 


172  POLITICAL    ECONOMY. 

vance  the  money  on  the  promissory  notes  of  merchants 
and  others  not  yet  due,  on  discounting  the  interest, 
and  it  is  chiefly  through  these  borrowers  and  depositors 
that  their  notes  get  into  circulation. 

Though  their  notes  are  liable  to  be  returned  to 
them  to  be  exchanged  for  specie  as  soon  as  they  are 
issued,  yet  it  is  found  by  experience  that  by  reason 
of  the  superior  convenience  of  bank  paper  over  the 
precious  metals  in  saving  time  and  trouble,  a  certain 
proportion  of  their  issues  remains  some  time  in  circula 
tion.  To  the  extent  then  which  experience  justifies, 
they  issue  their  paper  —  aiming  always  to  keep  as 
much  specie  in  their  vaults  as  will  suffice  to  meet  the 
ordinary  and  probable  demands  for  gold  and  silver ; 
and  it  is  'commonly  considered  that  their  issues  are 
within  the  bounds  of  prudence,  if  they  have  not  more 
than  three  dollars  of  paper  in  circulation  for  one 
dollar  of  specie  in  their  vaults.  This,  however,  does 
not  mean  three  times  the  amount  of  their  capital 
stock,  even  where  that  stock  was  altogether  in  specie, 
because  as  soon  as  the  banks  begin  to  lend,  a  certain 
portion  of  the  amount  lent  is  specie,  in  consequence 
of  which  they  may  reach  the  limit  prescribed  by  pru 
dence  (three  times  as  much  circulation  as  specie,) 
when  they  had  not  lent  to  double  the  amount  of  their 
capital. 

Whenever,  by  reason  of  a  sudden  panic  of  distrust 
with  the  public,  or  of  heavy  drafts  of  coin  for  export, 
the  specie  of  the  bank  is  exhausted,  or  has  become 


BANKS.  173 

very  low,  the  bank  must  then  go  into  the  market  to 
purchase  specie;  which,  being  a  recourse  likely  to 
affect  their  credit,  they  never  resort  to  but  in  cases 
of  necessity. 

When  prudently  conducted,  these  institutions  are 
very  useful  in  a  commercial  community.  So  far  as 
they  make  paper  supply  the  place  of  gold  and  silver, 
they  enable  the  country  to  dispense  with  a  large  quan 
tity  of  those  metals ;  and  the  capital  thus  saved  may 
be  profitably  employed  in  other  branches  of  domestic 
industry.  By  means  of  cheques  or  drafts  on  them, 
their  depositors  —  comprehending  the  whole  mercan 
tile  class,  and  all  men  of  business  —  are  spared  the 
expense  of  keeping,  counting,  and  transferring  their 
money ;  and  they  greatly  diminish  the  amount  of  idle 
specie  capital — the  little  rills  of  individual  depositors 
swelling  the  stream  in  the  banks  —  their  means  of 
making  loans  are  thereby  augmented.  They  are  more 
likely  than  individuals  to  lend  their  money  to  borrow 
ers,  who  can  use  what  they  borrow  in  a  way  that  will 
be  at  once  safe  to  the  bank,  profitable  to  themselves, 
and  beneficial  to  the  community — and  lastly,  they 
can,  by  their  established  credit,  give  seasonable  aid 
to  the  government  in  times  of  sudden  calls  for  large 
pecuniary  disbursements. 

But  these  benefits  are  sometimes  attended  with 
great  drawbacks.  Banks  are  occasionally  tempted, 
with  the  view  of  increasing  their  gains,  to  enlarge 
15* 


174  POLITICAL    ECONOMY. 

their  issues  to  a  point  which  is  consistent  neither 
with  their  own  safety  nor  the  interests  of  the  public. 
The  consequence  of  these  imprudent  issues,  when 
ever  the  course  of  trade  causes  a  great  export  of  spe 
cie,  is  probably  the  failure  of  the  bank  to  redeem  its 
notes;  which  immediately  checks  their  circulation, 
and  subjects  the  people  to  the  evils  of  a  depreciated 
currency,  that  embarrasses  all  the  operations  of  com 
merce,  and  deprives  creditors  of  a  portion  of  their 
debts.  Even  where  this  serious  result  does  not  take 
place,  the  excess  of  paper  is  apt  to  engender  a  wild 
spirit  of  speculation,  and  to  stimulate  private  extra 
vagance  ;  both  of  which  are  sure  to  be  followed  by  a 
reaction  that  is  severely  felt  by  the  community. 
Thus,  in  1836,  when  the  banks  had  received  a  large 
accession  of  specie  from  abroad,  in  consequence  of 
special  orders  of  the  Government,  for  the  purpose  of 
lessening  the  circulation  of  bank  paper,  and  increas 
ing  that  of  specie,  those  institutions,  instead  of 
increasing  the  specie  currency,  were  tempted  to  dis 
tend  their  loans  and  issues  to  an  unprecedented 
amount,  so  that  the  sales  of  the  public  lands,  having 
then  become  a  favorite  object  of  speculation,  were 
increased  from  three  millions  of  dollars  in  a  year  to 
twenty  millions.  The  effect  of  this  redundancy  of 
paper  money  was,  in  the  following  year,  a  general 
stoppage  of  the  banks,  and  an  extent  of  private  bank 
ruptcy  and  ruin  which  had  never  been  witnessed 
before. 


BANKS.  175 

A  similar  result  was  witnessed  in  1857.  In  con 
sequence  of  the  large  supplies  of  gold  received  from 
California,  the  banks  had  all  lent  liberally,  and 
issued  paper  in  excess.  When,  then,  one  of  the  most 
unsound  of  them*  became  embarrassed,  and  failed  to 
redeem  its  notes,  a  panic  with  all  the  rest  caused 
them  to  suspend  cash  payments,  by  which  all  com 
mercial  and  manufacturing  industry  was  greatly 
checked,  and,  in  some  cases,  entirely  arrested. 

The  first  object,  therefore,  to  which  these  institu 
tions  should  bend  all  their  efforts,  is  to  keep  their 
issues  within  the  limits  of  safety.  With  this  view, 
they  are  subjected  to  various  restrictions,  in  addition 
to  those  contained  in  their  charters,  which  are  im 
posed  by  the  stockholders  in  their  by-laws,  and  some 
times  by  the  president  and  directors  themselves. 
The  most  important  of  these  regulations  are  the 
following : 

In  making  their  loans  and  discounts,  these  corpo 
rations  should  not  only  be  guarded  as  to  the  amount 
and  the  security,  but  should  also  attend  to  the  char 
acter  and  purpose  of  the  loans.  They  should,  with 
rare  exceptions,  make  them  for  short  terms,  as  sixty 
or  ninety  days ;  the  difficulty  of  foreseeing  the  vicis 
situdes  of  trade  being  in  proportion  to  the  remoteness 
of  the  time.  They  should  always  prefer  discounting 
that  paper  which  had  been  given  for  an  actual  pur 
chase  of  merchandise  rather  than  that  given  merely 

*  The  Bank  of  Pennsylvania. 


176  POLITICAL     ECONOMY. 

to  procure  money.  The  former,  commonly  called 
"  business  paper/'  is  the  safest,  because  the  maker  of 
the  note  has  received  a  value  equal  to  the  amount  of 
the  debt  he  has  contracted  with  the  bank ;  while  the 
66  accommodation  paper  "  may  have  been  an  expedient 
to  procure  money  to  spend,  or  to  discharge  an  old 
debt,  and  the  bank  has  not  as  good  an  assurance  that 
the  borrower  will  be  able  to  repay  his  debt  when  it 
is  due. 

There  is,  indeed,  in  all  the  banks,  much  money 
lent  of  the  latter  description,  nor  is  it  always  easy  or 
important  to  avoid  it ;  but  many  loans  of  this  char 
acter  are  continued  for  years  by  a  renewal  of  the 
notes  every  term  of  sixty  or  ninety  days ;  and  it  is 
notorious  that,  in  times  of  great  pressure  on  the 
banks,  when  they  aim  to  get  back  a  portion  of  what 
has  been  thus  lent,  a  curtailment  to  the  amount  of 
ten,  or  even  five  per  cent.,  is  severely  felt  by  the 
borrowers. 

The  issue  of  small  notes,  though  a  source  of  profit 
to  the  banks,  is  injurious  to  the  public.  A  dollar 
note  is  not  more  convenient  than  a  gold  dollar,  and 
the  cost  of  fabrication  may  be  nearly  or  quite  as 
much.  But  the  great  disadvantage  of  such  notes  is 
that  they  banish  gold  and  silver  from  circulation  to 
an  equal  amount ;  so  that,  when,  by  the  course  of 
trade,  specie  is  demanded  for  exportation,  the  banks 
which  are  first  applied  to  for  gold  and  silver  cannot 
readily  obtain  from  the  community  what  they  have 


BANKS.  177 

paid  away.  The  greater,  therefore,  the  denomina 
tion  of  the  smallest  notes,  the  larger  is  the  reservoir 
from  which  the  banks  can  supply  the  specie  of  which 
they  have  been  drained,  and  thus  better  escape  the 
evils  of  suspension. 

But,  more  effectually  to  secure  to  the  public  the 
benefits  of  banks,  and  to  guard  against  their  mis 
chiefs,  the  restrictions  which  the  legislature  should 
impose  on  them  seem,  principally,  to  be  the  fol 
lowing  : 

No  bank  should  be  established  without  a  consider 
able  capital.  Sometimes  these  institutions  are  brought 
into  existence  where  they  are  not  wanted,  by  a  few 
men,  to  serve  their  own  selfish  ends ;  by  some  who 
hope  to  be  salaried  officers  of  the  bank ;  by  others, 
who  are  needy  borrowers ;  and  by  others  again,  who, 
being  eager  speculators,  are  looking  forward  to  the 
prospect  of  large  loans.  It  is  only  when  the  capital  of 
a  bank  is  large  that  the  public  can  have  a  w~ell-founded 
confidence  in  its  solidity  —  that  ite  ^acilities  to  trade 
were  actually  called  for,  and  that  its  stock  is  owned 
by  those  who,  possessing  wealth,  may  be  presumed  to 
have  the  requisite  prudence  and  judgment  for  its 
management. 

The  capital  should  be  scrupulously  paid  in  gold  and 
silver.  When  a  bank  goes  into  operation  before  its 
whole  capital  stock  is  paid  up,  as  is  usual,  the  money 
paid  on  the  last  instalments  is  often  specie  drawn 
from  the  bank  itself;  by  which  course,  its  proportion 

M 


178  POLITICAL     ECONOMY. 

of  specie,  and  consequently  both  its  profits  and 
solidity,  are  much  diminished. 

Whenever  the  banks  suspend  cash  payments,  they 
should  always  be  subjected  to  some  penalty  in  addi 
tion  to  the  loss  of  their  profits.  They  should  be 
made  to  pay  interest  on  their  notes,  when  not 
redeemed,  to  be  recoverable  by  a  short  legal  process. 

Whenever  their  dividends,  or  actual  profits,  exceed 
a  certain  prescribed  amount,  one-half  of  the  excess 
should  be  payable  into  the  public  treasury.  There 
should  be  a  frequent  change  of  directors,  and  no  one 
should  continue  in  that  office  more  than  a  certain 
number  of  years. 

They  should  be  prohibited  from  issuing  any  note 
under  a  certain  amount.  A  few  of  the  States  have 
forbidden  the  issue  or  circulation  of  any  note  under 
five  dollars.  An  extension  of  this  restraint  would 
be  wise.  Among  many  errors  in  relation  to  banking 
and  finance  into  which  General  Jackson  and  his 
advisers  were  betrayed,  there  is  one  piece  of  policy 
the  wisdom  of  which  even  many  of  his  enemies 
admitted ;  and  this  was,  that  no  bank  should  issue  a 
note  of  a  less  denomination  than  twenty  dollars.  In 
that  case,  there  would  always  be  in  the  community 
an  ample  fund  on  which  the  banks  could  draw  when 
pressed  for  specie. 

They  should  be  required,  under  a  penalty,  to  limit 
the  amount  of  their  debts,  whether  to  note-holders  01 
depositors,  in  proportion  to  their  specie. 


BANKS.  179 

But,  of  all  regulations,  no  one  has  been  found  more 
beneficial  than  frequent  published  statements  of  their 
condition ;  in  which  the  amount  of  their  loans,  cir 
culation,  deposits,  and  specie  should  be  officially 
stated.  At  fixed  times,  also,  commissioners  should  be 
appointed  by  the  Government,  to  make  a  strict  exa 
mination  and  full  report  of  their  liabilities  and 
resources. 

With  these  and  other  similar  restrictions,  as  expe 
rience  should  develope  their  necessity,  the  public 
would  be  more  effectually  guarded  against  the  impru 
dence  of  these  institutions  than  they  can  be  by  the 
plan  which  has  lately  obtained  public  favor  under  the 
name  of  "  free  banks,"  by  which  those  institutions 
are  deprived  of  the  power  of  creating  a  paper  cur 
rency,  but  may  obtain  notes  for  circulation  from  the 
Government  on  depositing  with  the  proper  public 
authorities  approved  stock  of  the  States  to  an  equal 
amount,  as  eventual  security  for  the  redemption  of 
the  notes.  It  has  been  found  by  experience  that  the 
plan  does  not  prevent  the  banks  from  suspending  •/ 
specie  payments  like  the  rest ;  and  so  far,  they  have 
failed  in  one  of  their  most  important  objects.  It 
is  also  wrell  known  that  if,  in  consequence  of  the 
embarrassment  of  the  banks,  the  stock  pledged  by 
them  should  be  thrown  into  the  market,  it  would  sell 
greatly  under  par,  and  thus  fail  to  redeem  the  notes 
for  which  it  had  been  pledged.  It  must,  however,  be 
admitted  that,  in  the  reckless  way  in  which  bank 


180  POLITICAL    ECONOMY. 

charters  have  often  been  granted,  and  in  which  both 
the  stockholders  and  directors  have  commonly  per 
formed  their  respective  duties,  this  plan  of  banking 
affords  some  security  against  those  very  heavy  losses 
which  the  public  has  sometimes  sustained  from  those 
institutions. 

That  portion  of  the  capital  of  a  community  which 
consists  of  money,  though  it  is  often  denominated  its 
circulation,  more  properly  falls  under  the  head  of 
fixed  than  of  circulating  capital.  It  is  not,  like  the 
former,  consumed  by  a  single  use,  but  may  exercise 
its  useful  functions  again  and  again  until  it  is  worn 
out.  It  may,  in  its  faculty  of  facilitating  exchanges, 
be  assimilated  to  wagons  or  other  carriages  used  for 
transportation,  and,  like  them,  its  wear  and  tear  is 
the  amount  of  its  annual  cost  to  the  nation. 

Some  persons,  in  consideration  of  the  frequent 
failure  of  banks  to  redeem  their  notes,  and  of  the 
serious  mischiefs  to  the  community  which  thence 
ensue,  would  substitute  banks  of  deposit  for  banks  of 
circulation,  to  furnish  a  safe  paper  currency,  since 
they  have  specie  in  their  vaults  for  every  note  they 
have  issued,  and  consequently  their  notes,  thus  certain 
to  be  redeemed,  furnish  the  public  with  a  paper  circu 
lation  of  equal  value  with  gold  and  silver,  and  which 
can  never  depreciate. 

To  this  proposition  there  is  more  than  one  objec 
tion.  The  first  is  that  it  would  deprive  the  commu 
nity  of  the  advantage  now  enjoyed  of  the  gain  derived 


BANKS.  181 

from  the  substitution  of  so  cheap  an  article  as  paper 
for  the  precious  metals,  and  which  constitutes  an 
important  item  of  national  economy.  It  is  fair  to 
assume  that,  if  there  were  no  bank  paper  in  circula 
tion,  there  would  be  a  specie  currency  to  nearly  the 
same  amount.  Let  us  suppose  the  excess  of  paper 
to  be  10  per  cent.  The  amount  of  bank  paper,  thus 
reduced,  would  not  be  less  than  two  hundred  millions. 
To  save  this  amount  of  capital,  however  expended, 
whether  in  productive  or  unproductive  consump 
tion,  has  always  been  considered  a  great  national 
benefit ;  consequently,  to  surrender  it,  and  retracing 
our  steps  by  buying  from  other  countries  as  much 
gold  and  silver  as  would  supply  the  place  of  our  pre 
sent  paper  circulation,  would  be  a  far  more  serious 
inj  ury .  Even  if  executed  very  slowly  and  gradually,  so 
large  a  demand  for  new  capital  would  cause  a  pressure 
beyond  endurance.  It  would  have  the  same  effect, 
for  the  time,  as  the  annihilation  of  capital  to  the  same 
amount  as  the  substitution,  and  it  would  equally  arrest 
useful  enterprise,  and  paralyze  every  species  of  profit 
able  industry. 

But,  in  the  next  place,  if  the  plan  could  be  carried 
into  execution,  its  promised  benefits  would  not  pro 
bably  be  of  long  continuance.  In  a  bank  of  deposit, 
like  that  of  Amsterdam,  the  specie  would  be  steadily 
accumulating  until,  if  not  interfered  with,  it  would 
amount  to  nearly  the  whole  circulating  currency  of 
16  L 


182  POLITICAL    ECONOMY. 

the  country.  But  in  this  process  it  would  always  be 
exposed  to  more  than  one  danger.  When  those  who 
had  the  charge  of  this  treasure  (supposing  them  inca 
pable  of  abstracting  any  of  it  for  their  own  purposes), 
found  that  it  had  long  lain  idle  and  untouched,  would 
be  tempted  to  afford  pecuniary  relief  to  others,  espe 
cially  public  bodies  and  corporations,  as  was  done  by 
the  Bank  of  Amsterdam,  under  the  delusive  expecta 
tion  that  the  money  could  be  returned  whenever  it 
should  be  actually  wanted.  And  though  the  managers 
of  the  bank  should  be  proof  against  all  such  tempta 
tions,  yet  public  sentiment  itself  might  produce  the 
same  result ;  and,  in  any  season  of  public  difficulty 
or  emergency,  such  as  invasion,  insurrection,  or  war, 
they  might  insist  on  making  a  part  of  the  idle  hoards 
of  the  bank  active  and  useful  in  aiding  the  public 
treasury  —  in  which  case,  the  specie  retained  in  the 
bank  being  still  sufficient  to  redeem  the  notes  re 
turned  to  it,  the  bank  of  deposit  would  be  converted 
into  a  bank  of  circulation,  if  it  continued  to  exist,  or 
its  business  was  not  altogether  closed. 

^Ye  have  seen  that  the  production  of  any  commo 
dity  may  be  excessive,  or,  in  other  words,  that  its 
supply  may  exceed  its  demand.  But  while  this  is 
very  practicable  for  one  or  several  commodities,  it 
can  never  be  the  case  with  all.  Since  commodities 
are  purchased  by  commodities,  the  glut  of  some 
always  supposes  a  deficiency  of  others.  A  general 


BANKS.  183 

excess  is,  therefore,  a  contradiction,  as  has  been  well 
shown  by  Mr.  Say  in  his  theory  of  gluts. 

Having  now  gone  through  the  subject  of  production 
of  what  is  necessary  or  useful  to  man,  whether  by 
agriculture,  mining,  fisheries,  manufactures,  or  com 
merce,  we  will  proceed  to  consider  the  destination  of 
what  has  been  thus  produced. 


CHAPTER  XIY. 

CONSUMPTION. 

THE  end  and  object  of  all  production  is  consump 
tion  ;  for  why  should  men  exert  bodily  toil  or  mental 
care  in  producing,  except  for  the  gratification  afforded 
by  consuming,  or  using  what  had  been  produced.  His 
productive  industry  has,  therefore,  always  been  con 
ducted  with  a  view  to  this  result.  Thus,  let  us  look 
to  the  production  of  a  loaf  of  bread.  After  the  land 
has  been  cleared  of  its  timber,  or  other  spontaneous 
growth,  it  must  be  broken  up  by  the  plough  or  the 
spade.  It  must  then  be  sowed  with  the  seed  sought 
to  be  multiplied  —  say  wheat,  and  harrowed.  It 
germinates,  grows,  and  finally  ripens,  when  it  is 
reaped  by  one  instrument  or  machine ;  threshed  out 
by  another,  and  winnowed  by  a  third.  It  is  then 
carried  to  the  mill,  where  it  is  first  ground  into  flour, 
which  is  separated  into  two  or  three  kinds,  and  all 
of  them  from  the  bran.  The  flour  is  carried  to  the 
baker,  who,  by  a  process,  partly  mechanical  and 
partly  chemical,  makes  it  into  dough,  kneads  and 
bakes  it,  when  it  becomes  one  of  the  most  common 
articles  of  human  subsistence. 

In   like   manner  of  a  beef-steak.     The   ox   from 

(184) 


CONSUMPTION.  185 

which  it  was  taken  was  probably  reared  in  a  region 
where  the  natural  herbage  was  abundant.  He  was 
thence  transported  to  a  distance,  where  he  was  pur 
chased  and  fattened  for  the  shambles.  He  was  then 
killed  by  the  butcher,  who  distributed  his  flesh,  hide, 
hair,  tallow,  feet,  bones,  and  horns  to  different  sets 
of  customers,  for  their  several  purposes,  and  one  of 
the  most  savory  portions  of  his  meat  was  conveyed 
to  the  cook,  who  converted  it  into  a  steak.  And  so 
with  every  object  of  apparel,  from  a  hat  to  a  shoe, 
or  of  household  furniture,  from  a  grand  piano  to  a 
kitchen-fork. 

Of  the  immense  multitude  of  articles  thus  annu 
ally  produced  for  man's  necessities  or  gratification, 
the  whole  is  consumed  in  about  the  same  time  that 
it  has  been  produced,  with  the  exception  of  a  small 
portion,  —  about  five  or  six  per  cent.,  —  which  gradu 
ally  adds  to  the  wealth  of  the  community. 

This  consumption,  however,  is  not  made  altogether 
by  the  individuals  who  were  the  producers ;  but  a 
considerable  portion  is  made  by  the  community,  in  its 
aggregate  character  —  that  is,  by  the  Government. 
This  distribution  is  very  different  in  different  coun 
tries  ;  and  as  a  general  rule,  the  larger  the  share 
which  is  received  by  individuals,  and  the  smaller  that 
received  by  the  Government,  the  happier  and  freer 
are  the  people. 

The  better  to  understand  how  the  portion  con 
sumed  by  the  Government  is  separated  from  the 
16* 


186  POLITICAL     ECONOMY. 

whole  amount  annually  produced  and  disbursed,  let 
us  advert  to  the  distribution  of  political  power. 

In  all  well-organized  governments,  the  power  of  the 
state  is,  by  its  fundamental  principles,  or  constitu 
tion,  divided  between  the  legislature,  the  executive, 
and  the  judiciary.  The  legislature  determines  its 
own  ordinary  functions,  as  well  as  those  of  the  execu 
tive  and  judiciary.  It  controls  the  conduct  of  indi 
viduals  when  the  public  good  requires  it,  enjoining 
some  acts,  and  prohibiting  others.  It  provides  for 
the  national  defence,  by  sea  and  land.  It  maintains 
a  friendly  diplomatic  intercourse  with  foreign  nations. 
It  establishes  courts  to  administer  justice  and  to 
punish  crimes,  prescribes  the  rules  of  property  and 
of  civil  rights,  and  lastly,  it  provides  an  adequate 
revenue,  which  is  disbursed  in  the  modes  and  accord 
ing  to  the  rules  it  has  prescribed. 

The  executive  has  the  power  of  appointing  all  offi 
cers,  civil,  military,  or  naval.  By  these  it  defends 
the  country  against  foreign  enemies  or  domestic  insur 
rection,  collects  and  disburses  the  public  revenue,  and 
executes  the  judgments  of  the  courts,  both  civil  and 
criminal. 

The  judiciary,  howrever,  tries  all  public  offenders, 
and  sentences  them  to  punishment.  It  settles  all  dis 
putes  between  individuals  about  property,  enforces 
contracts,  maintains  rights,  whether  derived  from  law 
or  custom,  and  decides  all  questions  by  settled  rules 


CONSUMPTION.  187 

of  evidence,  and  in  accordance  with  the  behests  of 
law  and  the  principles  of  justice. 

To  enable  the  Government  to  perform  these  high 
and  important  duties,  the  legislature  must  provide  an 
adequate  revenue,  which  is  sometimes  derived  in  part 
from  the  profits  or  sales  of  public  property,  but  mainly 
from  taxes,  the  principles  of  which  we  will  now  con 
sider  ;  premising  that,  inasmuch  as  by  far  the  larger 
part  of  every  community  spend  on  themselves  and 
their  families  all  their  earnings,  this  subject  of  taxa 
tion  is  a  very  important  one,  as  respects  both  the 
productiveness  of  the  tax  and  the  interest  of  the 
people. 

According  to  Adam  Smith,  whose  views  on  this 
subject  have  been  generally  approved,  taxes  ought  to 
conform  to  the  four  following  maxims  : 

1.  Every  citizen  ought  to  contribute  to  the  public 
revenue  in  proportion  to  his  ability.     It  is  sheer  jus 
tice  that  be  who  has  the  largest  amount  of  property 
protected  should  pay  the  most  for  that  protection. 

2.  The  tax  which  each  person  is  required  to  pay 
should  be  certain,  both  as  to  the  amount,  the  time, 
and  the  mode  of  payment ;  so  as  to  leave  as  little 
discretion  as  possible  to  the  tax-gatherer.     The  un 
certainty  of  a  tax  is  severely  felt  by  the  payer,  as  it 
prevents  preparation,  or  makes  it  unavailing,  though 
it  may  add  nothing  to  the  revenue. 

3.  Every  tax  ought  to  be  levied  at  the  time  and 
in  the  mode  which  is  most  convenient  to  the  payer. 


188  POLITICAL    ECONOMY. 

A  tax,  for  example,  on  articles  as  consumpted,  may 
be  very  little  felt,  while  the  same  tax,  collected  at 
once,  might  be  oppressive,  and  perhaps  impracticable. 

4.  A  tax  should  take  out,  and  keep  out,  of  the 
pocket  of  the  payer,  as  little  as  possible  beyond  what 
it  brings  into  the  public  treasury.  Thus,  a  tax  may 
pass  through  several  successive  hands,  each  of  whom, 
receiving  his  compensation  proportionally,  deducts 
from  the  proceeds  of  the  tax.  It  may,  by  prohibit 
ing  or  discouraging  particular  branches  of  industry, 
render  many  persons  less  able  to  pay  the  tax.  It 
may,  by  encouraging  smuggling,  and  evasions  of  the 
tax,  render  it  less  productive.  It  may  tax  the  time 
as  well  as  the  purses  of  the  citizens.  And  lastly,  it 
may  subject  the  citizen  to  the  interruption  and  vexa 
tion  of  domiciliary  visits  and  inquisition. 

Taxes  are  sometimes  used  for  other  purposes  than 
revenue.  When  laid  on  what  are  regarded  as  nui 
sances,  they  are  meant  to  be  prohibitions,  and,  when 
they  fail  in  this  object,  to  make  to  the  public  some 
compensation  for  the  failure.  Of  this  character  are 
taxes  on  gaming  and  drinking-houses,  or  lotteries. 

They  are  also  meant,  by  discouraging  one  branch 
of  industry,  to  encourage  another :  as  where  a  tax  is 
laid  on  certain  fabrics  received  from  abroad  by  the 
exchanges  of  commerce,  for  the  sake  of  encouraging 
the  domestic  producer  of  similar  articles,  on  whose 
industry  the  tax  operates  as  a  bounty. 

The  preceding  views  will  be  illustrated  by  a  sepa- 


CONSUMPTION.  189 

rate  notice  of  the  taxes  which  are  principally  resorted 
to  for  revenue. 

The  Land  Tax. — As  the  land  of  every  civilized  and 
populous  community  constitutes  the  largest  item  of 
its  property — is  the  main  source  of  its  annual  income, 
and  cannot  be  withdrawn  from  the  reach  of  the  tax- 
gatherers — it  is  a  general  object  of  taxation,  and  source 
of  public  revenue. 

This  tax  should  vary  in  its  rate,  according  to  the 
value  of  the  land.  This  rule  is,  in  some  measure, 
necessary  as  well  as  just.  An  uniform  tax,  if  not 
very  low,  would  be  more  than  poor  lands  could  pay; 
and,  if  it  were  low,  it  could  not  yield  much. 

Nor  would  it  be  right  to  apportion  this  tax  accord 
ing  to  the  income  yielded  by  the  land ;  since  city  lots 
and  unimproved  lands,  though  they  might  yield  no 
direct  income,  might  compensate  their  proprietors  by 
the  steady  increase  of  their  value,  and  property, 
although  thus  productive,  would  escape  taxation.  The 
fairest  rule,  then,  would  be  to  tax  land  according  to 
its  market  value,  which  would  comprehend  its  obvious 
future  as  well  as  its  present  capabilities.  But  here 
again  injustice  may  be  done.  It  is  not  unusual  for 
one  person  to  have  a  life  estate  in  landed  property, 
and  another  tne  reversion ;  and  although  the  former, 
who  receives  the  present  profit,  ought  to  pay  the 
largest  share,  the  other  ought  not  to  be  wholly 
exempt.  To  adjust  the  tax  equitably  between  them 
would  be  a  matter  of  some  difficulty,  and  would  pro- 


190  POLITICAL    ECONOMY. 

bably  admit  of  no  rule  that  would  not  be  sometimes 
unjust  to  one  of  the  parties.  The  foregoing  consider 
ations  seem  to  make  a  land  tax  ineligible,  unless  it  is 
a  very  light  one. 

But  another  objection  to  this  tax  in  the  United 
States  is  that,  as  the  value  of  land  is  greatly  increased 
by  the  increased  density  of  population,  it  is  liable  to 
very  great  and  rapid  changes  here;  so  as  for  it  to  have 
any  foundation  in  justice,  there  must  be  frequent 
valuations,  which  occasion  a  heavy  expense,  and  one 
of  frequent  occurrence.  The  land  tax,  however  the 
landed  proprietor  may  appear  to  succeed  in  throwing 
it  on  his  tenant,  must  always  fall  upon  himself,  and 
must  be  deducted  from  the  annual  profits  of  the  land. 

Tax  on  houses. — This  tax  falls  wholly  or  principally 
on  their  tenants.  Houses  must  yield  the  ordinary 
profits  of  capital,  or  they  will  not  be  supplied  —  and 
if  their  annual  charge  is  raised,  whether  by  a  tax  or 
in  any  other  way,  the  rent  must  rise  in  proportion, 
except  in  those  cities  and  towns  that  are  going  to 
decay,  when  the  supply  of  houses  may  exceed  the 
demand  —  in  which  case  the  tax  must  fall  upon  the 
proprietor,  and  be  taken  from  the  rent. 

Tax  on  imports. — This  tax  is  recommended  by  so 
many  considerations,  that  by  far  the  greater  part  of 
the  revenue  of  the  General  Government  is  raised  in 
this  way.  As  it  is  laid  on  articles  of  general  con 
sumption,  such  as  sugar,  coffee,  tea,  wine,  and  every 
species  of  woven  goods,  it  is  in  general  paid  by  the 


CONSUMPTION.  191 

citizens  according  to  their  ability,  because  according 
to  their  ordinary  expenses.  It  is  more  productive 
than  any  other  tax  could  be,  since  by  reason  of  the 
large  amount  of  our  imports,  a  moderate  impost  will 
yield  a  large  revenue.  It  being  collected  by  the  re 
spective  custom-houses  at  the  places  of  import,  and 
paid  in  large  sums  by  the  importing  merchant,  it 
costs  less  to  collect  it  than  any  other  tax ;  and  lastly, 
it  encourages  the  domestic  production  of  many  com 
modities,  by  subjecting  the  fabrics  of  their  foreign 
rivals  to  an  additional  cost.  Without  this  tax,  many 
branches  of  domestic  manufacture,  and  some  few  of 
raw  produce,  which  are  now  thriving  and  profitable, 
would  be  greatly  diminished,  and  some  would  be  aban 
doned  altogether.  Whether  this  is  a  national  advan 
tage  or  not,  is  another  question,  which  has  been  dis 
cussed  in  another  place.* 

Its  disadvantages,  though  small,  compared  with  its 
benefits,  must  also  be  noticed.  First,  the  tax  invites 
to  smuggling,  which,  as  it  can  be  carried  on  in  retired 
creeks  and  inlets,  can  be  prevented,  or  rather  checked, 
only  by  revenue  cutters,  maintained  at  a  great  ex 
pense —  or  by  officers  placed  along  the  line  which 
separates  the  United  States  from  the  British  colonies 
on  this  continent.  Secondly,  by  unduly  encouraging 
particular  branches  of  industry,  it  causes  capital  and 
labor  to  be  diverted  from  a  more  profitable  employ 
ment,  and  thus  causes  a  loss  of  the  national  capital ; 

*  See  page  116. 


192  POLITICAL    ECONOMY. 

and  lastly,  because  all  those  who  abstain  from  the 
use  of  imported  merchandise  may  exempt  themselves 
from  the  payment  of  any  portion  of  the  tax. 

Excise. — This  term  is  commonly  applied  to  a  tax 
or  duty  on  home-made  articles ;  and,  like  the  impost, 
is  paid  by  the  consumer  of  the  articles,  who,  in  pur 
chasing  them,  pays  the  tax.  It  is  occasionally  ex 
tended  to  a  great  variety  of  articles,  but  in  this 
country  has  commonly  been  confined  to  the  distiller 
of  spirits,  which  are  taxed  partly  because  their  con 
sumption  is  regarded  as  unfavorable  both  to  the 
health  and  the  morals  of  the  people,  and  partly  be 
cause,  on  account  of  the  prevalent  popular  taste  for 
them,  the  tax  is  very  productive. 

The  objection  to  this  class  of  taxes  is,  that  to  insure 
its  faithful  collection,  many  officers  are  necessary, 
with  a  course  of  inquisition  which  is  vexatious  and 
repugnant  to  the  feelings  of  a  free  people.  The  first 
excise  laid  in  the  United  States  caused  an  insurrec 
tion  in  the  western  part  of  Pennsylvania — the  people 
there  regarding  it  as  peculiarly  oppressive  and  unjust, 
since  whiskey  was  the  only  product  of  their  industry 
which  would  then  bear  the  expense  of  transportation 
to  market,  by  reason  of  which  the  tax  fell  more 
heavily  on  their  industry  than  on  any  other  in  the 
Union.  The  objection  would  have  been  well  founded, 
but  for  the  fact  that  the  tax  on  spirits,  though  ad 
vanced  by  the  manufacturer,  would  eventually  fall 
on  the  consumer.  The  same  tax  has  been  subse- 


CONSUMPTION.  193 

quently  laid,  and  has  not  been  unacceptable  to  the 
distillers  of  spirits. 

Stamp  Taxes.  —  This  is  a  tax  which  is  levied  on 
such  papers  and  documents  as  are  of  frequent  use 
in  the  business  transactions  of  men,  as  deeds,  bonds, 
agreements,  receipts,  etc. ;  and  to  enforce  the  pay 
ment  of  the  tax,  all  such  papers  are  not  permitted  to 
be  used  as  evidence  in  a  court  of  justice,  and  are  thus 
deprived  of  the  principal  benefit  for  which  they  had 
been  created.  One  objection  to  this  class  of  taxes  is 
that  they  operate  very  unequally  —  it  not  being 
always  practicable  to  graduate  the  tax  according  to 
the  value  or  importance  of  the  subject  matter  of  the 
stamped  paper,  so  that  a  paper  concerning  a  value  of 
§100  may  pay  as  much  as  $10,000.  But  a  more  seri 
ous  objection  to  such  taxes  in  this  country  is  that 
they  are  often  not  merely  a  tax  on  the  purse,  but  a 
much  heavier  one  on  the  time  of  the  citizen.  In 
retired  country  places,  a  man,  instead  of  writing  a 
bond  or  receipt  on  the  first  piece  of  paper  that  is  at 
hand,  may  be  compelled  to  go  or  send  ten  or  twelve 
miles  for  a  stamp. 

Taxes  on  Banks. — As  these  corporations  are  invested 
with  the  valuable  privilege  of  substituting  their  paper 
for  specie,  from  which  the  citizens  are  generally  inter 
dicted,  and  as,  moreover,  there  is  always  danger  that 
they  may  bring  on  the  community  the  evil  of  a  de 
preciated  currency,  it  is  just  and  right  that  they 
should  contribute  toward  defraying  the  expenses  of 
17  N 


194  POLITICAL     ECONOMY. 

the  Government.  They  may  do  this  by  paying  a 
bonus  for  their  charter,  or  by  an  annual  tax  on  their 
dividends;  and  sometimes  a  tax  has  been  laid  on 
their  loans,  which,  however,  always  falls  on  their 
borrowers. 

Taxes  on  Auctions.  —  This  tax  seems  to  be  recom 
mended  partly  because  it  is  not  easily  evaded,  since 
the  auctioneers  are  commonly  responsible  for  the  tax, 
and  partly  by  way  of  discouragement,  as  many  are 
induced  to  purchase  at  auction  what  they  do  not 
need,  and  what  they  would  not  otherwise  have 
bought. 

Capitation.,  or  Poll  Taxes.  —  These,  from  their  sim 
plicity,  were  formerly  much  resorted  to ;  but  since, 
when  they  are  uniform,  they  cannot  yield  much,  and 
when  they  vary  with  the  fortunes  of  individuals  they 
are  unequal,  and  leave  much  to  the  discretion  of  the 
collectors,  they  are  now  but  little  used  in  this 
country. 

Taxes  are  sometimes  levied  by  means  of  licenses, 
to  consume  wine,  coffee,  and  tea,  or  to  follow  a  parti 
cular  occupation  —  as  to  keep  a  tavern,  to  be  a  mer 
chant,  a  pedler,  an  auctioneer,  to  keep  a  billiard 
saloon,  etc. 

The  objection  to  these  taxes  is  that  they  are  often 
very  unequal.  There  was  formerly,  in  Virginia,  a 
tax  on  merchants'  licences,  which  was  the  same  on 
each  individual,  whether  his  capital  or  business  was 
large  or  small.  They  are  commonly  recommended 


CONSUMPTION.  195 

by  the  consideration  that  a  tax  is  in  this  way  col 
lected  from  persons  who  would  otherwise  escape 
taxation. 

Taxes  on  necessaries  fall  at  first  on  labor,  but 
eventually  on  all  classes.  Taxes  on  luxuries  fall  ex 
clusively  on  the  rich  or  the  ostentatious. 

Taxes  have  been  divided  into  direct  and  indirect 
— that  is,  those  in  which  the  tax  is  directly  collected 
from  the  citizen,  and  those  in  which  the  tax  laid  on 
an  article  in  the  hands  of  the  producer  or  importer 
enters  into  its  price,  and  is  thus  paid  by  the  con 
sumer  when  he  purchases  the  article. 

It  has  often  been  maintained  by  politicians  that 
direct  taxes  were  preferable  to  indirect,  on  two 
grounds:  1.  That  they  are  more  economical;  and 
2.  That,  being  more  felt,  they  are  a  check  on  the  ex 
travagance  and  ambition  of  governments.  The  pre 
ference  claimed  for  direct  taxes  may,  however,  well 
be  impugned.  The  argument  that  they  are  more 
economical  rests  mainly  on  this — that  indirect  taxes, 
being  advanced  by  the  importer  or  home  producer, 
he  must  be  paid  for  such  advance,  and  the  taxed 
commodity  is  thereby  the  dearer  to  the  consumer. 
The  guards,  too,  to  prevent  evasions  of  the  indirect 
tax,  are  a  heavy  expense,  from  which  direct  taxes 
are  exempt. 

There  may  be  countries  in  which  direct  taxes  can 
be  levied  at  less  expense  than  the  indirect ;  but  it  is 
not  the  case  in  the  United  States.  Here,  whenever 


196  POLITICAL    ECONOMY. 

a  direct  tax  is  laid,  it  must  be  apportioned  among  the 
States  according  to  their  representation  in  Congress, 
and  the  property  taxed  must  be  valued.  Now,  the 
cost  of  such  valuation  renders  this  mode  of  taxation 
about  eight  times  as  costly  as  the  impost ;  and  from 
the  rapid  changes  in  the  value  of  the  lands  here, 
their  valuation  would  have  to  be  repeated  as  often 
as  the  tax  was  laid. 

But  if  indirect  taxes  were  less  economical,  they 
would  be  far  more  eligible.  They  are  paid  at  the 
time  and  in  the  mode  that  is  most  easy  to  every  one, 
who  pays  the  tax  in  purchasing  those  things  that  he 
finds  most  to  his  taste  and  gratification.  It  is  one 
of  the  first  duties  of  a  government  to  draw  its  neces 
sary  revenue  from  the  people  in  that  way  which  is 
the  least  onerous ;  and  that  is,  by  indirect  taxes.  To 
regard  the  greater  pressure  and  disagreeableness  of  a 
tax  as  a  recommendation,  seems  to  be  as  wise  as  it 
would  be  to  make  our  food  distasteful  in  order  to  save 
us  from  the  danger  of  gluttony  or  excess.  Every 
prudent  and  considerate  government,  therefore,  pre 
fers  indirect  taxes  as  long  as  they  are  adequate  to  the 
public  wants. 

Another  objection  to  direct  taxes  is,  that  it  is  not 
only  more  inconvenient  for  the  citizen  to  pay  the 
whole  amount  of  his  taxes  at  once  rather  than  by 
little  at  a  time,  as  he  purchases  the  taxed  articles, 
but  it  also  requires  a  much  larger  addition  to  the  cir 
culating  medium  of  the  country ;  and  in  preparing 


COX  SUMPTION.  197 

to  pay  it,  a  portion  of  his  funds  must  be  long  unem 
ployed. 

Taxes  are  sometimes  laid  on  the  property  of  the 
deceased,  especially  when  it  is  bequeathed  to  collate 
ral  relations.  This,  in  general,  is  a  tax  that  is  little 
felt  by  the  payer ;  but  it  would  often  fall  on  property 
scarce  able  to  pay  the  tax  in  addition  to  the  other 
charges  with  which  it  was  previously  burthened; 
in  which  case,  it  might  be  a  tax  on  productive 
capital. 

We  will  now  advert  to  the  principal  modes  in 
which  the  public  revenue  is  expended — and  first,  for 
the  national  defence. 

By  the  art  of  war,  and  the  aid  of  arms,  especially 
the  invention  of  gunpowder,  the  destructive  powers 
of  man  have  been  so  increased,  that  one  thousand 
well-equipped  soldiers  may  vanquish  and  destroy  an 
hundred  times  their  number,  provided  with  only  the 
natural  means  of  defence.  Experience  teaches  us 
that  those  who  possess  this  superiority  are  not  slow 
to  use  and  abuse  it.  Nations,  therefore,  to  preserve 
their  independence,  have  found  it  necessary  to  culti 
vate  the  same  means  of  destruction ;  hence  have 
arisen,  sometimes  for  defence  and  sometimes  for 
offence,  armed  associations  of  men,  at  first  for  short 
terms,  then  for  longer  ones,  and  finally  permanent  or 
standing  armies.  But  inasmuch  as  these  have  some 
times  been  used  by  their  ambitious  leaders  to  destroy 
the  liberties  they  were  created  to  preserve,  they  have 
17* 


198  POLITICAL    ECONOMY. 

naturally  become  objects  of  jealousy  with  free  nations. 
They  are  fortunately,  however,  not  necessary  to  the 
defence  of  such  nations.  Familiarized  as  their  people 
commonly  are  to  the  use  of  firearms,  and  though  but 
slightly  instructed  by  the  militia  laws  to  act  in 
masses,  they  are  a  surer  and  stronger  means  of 
national  defense  than  any  standing  army  can  be. 
In  a  season  of  danger  or  emergency,  their  volunteers 
will  soon  form  an  army  more  mimerous  and  more 
brave,  because  more  patriotic,  than  mere  mercenaries 
are  ever  likely  to  be  —  as  was  experienced  by  the 
United  States  in  the  late  Mexican  War. 

It  was  formerly  supposed  that  no  nation  could  sup 
port  a  permanent  military  force  exceeding  one  hun 
dredth  part  of  its  population ;  and  though,  with  the 
aid  derived  from  modern  improvements  in  the  means 
of  feeding,  clothing,  and  arming  its  military  force, 
some  nations  have  exceeded  this  limit,  the  excess  has 
not  been  great,  and  has  proved  very  oppressive  to 
their  people. 

The  naval  power  of  maritime  nations  is  a  still 
more  efficient  means  of  defence  than  the  army.  This 
species  of  armament  is  likely  to  be  materially  affected 
by  the  application  of  steam-power,  but  the  precise 
character  of  this  change  has  not  yet  been  determined 
by  experience. 

The  other  disbursements  of  the  government  are 
mainly  in  the  pay  of  its  civil  officers  of  all  descrip 
tions. 


CHAPTER   XV. 

PUBLIC   DEBTS. 

BUT  it  sometimes  happens  that  a  nation  is  urged 
to  incur  expenses  to  which  its  ordinary  revenue  is 
inadequate.  It  is  called  upon  to  resist  an  invasion 
by  foreign  enemies,  or  to  suppress  a  serious  domestic 
insurrection.  These  occurrences  at  once  lessen  the 
resources  of  the  State  at  the  very  time  that  the  de 
mands  upon  them  are  increased.  On  such  occasions 
they,  like  individuals,  have  recourse  to  borrowing,  to 
obtain  the  means  of  meeting  the  emergencies  of  the 
time.  Even  the  increased  expenses  attending  a  war 
may  recommend  to  the  government  recourse  to  a  loan 
for  its  extraordinary  expenses,  in  preference  to  new 
taxes. 

There  are  other  modes  in  which  a  public  debt 
may  originate.  In  the  ordinary  transactions  of  most 
governments  it  is  often  found  convenient  to  give, 
instead  of  money  to  the  officers  and  agents  of  the 
government,  written  evidences  of  their  claims  for 
public  services ;  and  where  these  claims  have  been 
suffered  to  accumulate,  in  consequence  of  pressing 
demands  on  the  public  treasury,  they  have  at  length 
become  a  recognised  public  debt,  and  the  government 

(199) 


200  POLITICAL    ECONOMY. 

has  contented  itself  with  the  payment  of  an  annual 
interest,  for  which  it  makes  a  permanent  provision. 
This  is  what  is  called  funding  the  debt.  In  this  way 
the  exchequer  and  navy  bills  in  England  have  been 
often  funded.  A  debt  may  also  be  contracted  by  the 
purchase  of  territory  of  a  foreign  government.  In 
this  way  the  United  States  contracted  a  debt  for  the 
purchase  of  Louisiana.  So  of  the  money  which  they 
contracted  to  pay  to  Mexico  for  the  cession  of  territory 
by  the  treaty  of  1848. 

This  expedient  enables  a  modern  State,  in  the  sta 
bility  and  good  faith  of  whose  government  the  world 
has  confidence,  greatly  to  extend  its  power,  whether 
for  protection  or  offence,  and  the  money  thus  pro 
cured  may  be  not  only  much  more  than  could  be 
obtained  by  taxes,  but  it  is  obtained  much  more 
speedily,  and  is  commonly  that  part  of  the  national 
capital  which  yields  the  least  profit.  Thus,  the 
British  Government,  where  the  ordinary  interest  is 
5  per  cent.,  can  commonly  borrow  millions  at  an  in 
terest  of  02  per  cent.,  or  even  less;  and  the  United 
States,  where  the  market  rate  of  interest  is  from  7  to 
10  per  cent,  in  the  different  States,  would  find  no  dif 
ficulty  in  borrowing  at  5  per  cent. 

The  way  in  which  the  money  thus  borrowed  is 
expended,  may  most  essentially  contribute  to  the 
defence  of  the  nation,  and  even  to  its  interests,  but 
the  national  capital  is  not  on  that  account  the  less 
impaired.  Every  public  loan  must,  in  lightening  the 


PUBLIC    DEBTS.  201 

present  burdens  of  the  government,  add  to  those  of 
posterity;    and  when  the  debt  goes  on  steadily  in 
creasing,  as  it  often  does,  the  annual  taxes  required 
to  pay  the  interest  of  the  debt,  may  be  sufficient  in 
amount  to  defray  the  whole  of  the  other  expenses  of 
the  government.     Every  public  loan  is  thus  apt  to 
be  the  parent  of  new  debt,  as  it  adds  to  the  annual 
public  expenditure.     Hence  there  is  a  strong  ten 
dency  for  public  debts,  after  once  begun,  to  go  on 
increasing;  and  the  United  States  furnish  the  only 
example  of  a  large  public  debt  being  fully  and  honestly 
discharged. 

The  public  debt  of  a  country  is  an  exponent  of 
what,  on  considerations  of  high  public  policy,  may 
have  been  wisely  and  beneficially  expended ;  yet,  in 
an  economical  view,  it  must  always  represent  a 
diminution  of  the  active  productive  capital  of  the 
country. 

Let  us  not,  however,  overrate  the  national  loss, 
even  when  viewed  under  this  aspect.  Much  which 
has  been  spent  by  armies  and  navies,  would  have 
been  as  unproductively  spent  if  the  same  capital  had 
remained  in  the  hands  of  individuals ;  and  it  is  the 
same  thing  to  the  wealth  of  the  nation,  whether  the 
money  has  been  expended  in  paying  soldiers  and 
sailors,  or  in  feeding  a  pack  of  hounds,  or  maintaining 
a  costly  equipage  and  long  retinue  of  servants.  Be 
sides,  a  portion  of  the  money  expended  on  the  naval 
and  military  service  employs  and  rewards  productive 


202  POLITICAL     ECONOMY. 

industry  in  providing  food,  clothing,  arms,  and  am 
munition —  all  of  which  make  not  an  insignificant 
deduction  from  the  amount  of  the  national  revenue 
spent  by  the  government. 

But  while,  after  every  deduction  is  made,  the  de 
struction  of  the  national  capital,  indicated  by  the 
public  debt,  is  very  great,  it  does  not  so  seriously 
threaten  the  safety,  or  even  the  resources  of  the 
States,  as  has  been  often  supposed. 

Whenever  the  loan  is  made  by  the  citizens  of  the 
country  making  it,  as  is  often  done,  then  it  being 
made  from  the  savings  of  the  excess  of  production 
over  consumption,  the  money  was  earned  before  it 
was  spent,  and  it  is  thus  drawn  from  the  profits  of 
previous  industry.  So  long  as  loans  are  made  in  this 
way,  from  the  capitals  already  accumulated,  it  is  not 
easy  to  set  limits  to  their  amount — since  taxes,  both 
direct  and  indirect,  to  pay  the  increasing  interest, 
may  be  made  to  reach  the  public  creditor  as  well  as 
others.  Thus  the  ruinous  consequences  which  have 
been  often  predicted  of  public  debts  seem  to  be  alto 
gether  fallacious,  though  their  injurious  effects  are  un 
deniable  ;  and  since,  in  return  for  the  present  benefit 
they  may  afford,  they  must  always  lessen  the  means 
of  individual  comfort  or  gratification,  and  impair  the 
sources  of  public  revenue,  they  ought  never  to  be 
resorted  to  except  on  occasions  of  great  national 
urgency ;  and  should  be  paid  off  as  soon  as  the  revenue 
of  the  State  is  sufficiently  productive. 


PUBLIC     DEBTS.  203 

Governments  have  resorted  to  different  expedients 
to  relieve  themselves  from  the  burden  of  debt.  Some 
times  they  have  depreciated  the  coin,  sometimes 
they  have,  by  paying  neither  principal  nor  interest, 
occasioned  the  evidences  of  the  debt  to  depreciate, 
and  have  then  profited  by  that  depreciation,  and  re 
deemed  the  public  debt,  by  paying  a  small  part  of  its 
original  amount.  Sometimes,  again,  they  have  com 
mitted  an  open  act  of  bankruptcy  or  repudiation,  and 
have  either  disavowed  the  whole  debt,  or  paid  a  small 
portion  of  it.  The  United  States  present  the  only 
example  of  the  payment  of  their  entire  debt  without 
any  deduction. 

Besides  the  debts  formally  contracted  by  the  Go 
vernment,  it  may  happen  that  one  country  may 
owe  a  large  debt  to  another,  in  the  course  of  their 
commercial  and  other  dealings.  The  country  which 
has  the  least  capital  is  always  likely  to  be  in  debt  to 
the  country  which  has  the  most.  The  money  which 
is  then  paid  for  interest  is  often  regarded  as  an  igno 
minious  tribute,  and  as  a  serious  national  loss.  Yet 
it  may  easily  happen  that  the  indebted  nation  gains 
more  than  it  loses  by  the  use  of  the  capital  it  has 
borrowed.  Thus,  suppose  that  it  borrows  at  an  inte 
rest  of  five  per  cent.,  and  that  the  market  rate  is 
eight  per  cent.  This  indicates  a  probable  gain  of 
three  per  cent. 

When  a  merchant  or  manufacturer  has  a  reason 
able  expectation  of  making  a  profit  from  the  use  of 


204  POLITICAL    ECONOMY. 

borrowed  capital,  it  is  of  no  importance  in  a  national 
point  of  view  whether  he  borrow  the  money  at  home 
or  abroad.  It  is  better,  both  for  him  and  the  com 
munity,  that  he  obtain  it  where  it  can  be  got  on  the 
best  terms. 

If  the  borrowed  money  was  invested  in  an  unpro 
fitable  undertaking,  as  in  an  ill-advised  and  unpro 
ductive  railroad,  then,  indeed,  it  would  be  a  national 
loss,  though  not  greater  than  if  it  had  been  borrowed 
at  home. 


CHAPTER  XVI. 

THE   PUBLIC   EXPENDITURE. 

OF  those  establishments  required  by  the  public 
welfare  which  the  Government  alone  is  competent  to 
provide,  the  following  are  the  principal : 

An  army  to  repel  foreign  invasions,  or  to  suppress 
domestic  insurrection. 

Fortifications  are  also  required  in  places  accessible 
to  ships  in  particular  situations  in  the  interior.  Ke- 
positories  of  arms  and  ammunition,  and  manufactories 
of  cannon  and  other  implements  of  war,  are  also  im 
portant,  as  well  as  schools  of  instruction  for  engineers 
and  other  officers.  A  navy,  too,  consisting  of  ships, 
steamers,  gun-boats,  etc.,  should  be  provided,  as  a 
most  efficient  means  of  national  defence,  together 
with  a  large  supply  of  seasoned  timber,  and  of  manu 
factured  iron,  adapted  to  naval  structures ;  provision 
for  diplomatic  intercourse  with  foreign  nations,  by 
means  of  ambassadors,  ministers,  and  consuls;  also 
officers  and  offices  for  the  collection  and  safe  keeping  of 
the  revenue,  whether  by  impost,  excise,  or  the  sur 
vey  and  sales  of  public  lands ;  for  coining  money  at 
the  mint,  for  the  payment  of  pensions  to  those  who 
18  (205) 


206  POLITICAL    ECONOMY. 

have  been  disabled  or  superannuated  in  the  public 
service,  and  for  the  management  of  the  post-office. 

Of  this  description  are  jails  and  penitentiaries  for 
the  safe-keeping  and  punishment  of  criminals.  The 
latter  are  thought  greatly  to  tend  to  prevent  crimes, 
by  affording  ready  means  of  graduating  punishments 
to  offences,  and  by  making  them  more  certain  —  it 
being  found  that  when  the  smaller  offences,  as  well 
as  the  great,  were  made  capital,  both  courts  and 
juries  were  often  astute  in  acquitting  those  who  had 
been  guilty  of  the  less  heinous  felonies. 

There  are  other  important  establishments,  which 
are  furnished  wholly  by  the  State  governments,  or  in 
some  cases  partly  by  them,  with  the  co-operation  of 
individuals ;  among  the  most  important  are  those  of 
religion. 

In  most  countries,  religion  is  established  by  the 
authority  of  the  state.  Its  creed  and  mode  of  wor 
ship  are  prescribed,  and  the  support  of  its  ministers 
is  provided  for  by  law.  But  in  the  United  States, 
every  one's  religious  faith  and  worship  are  left  to  his 
own  conscience.  He  may  make  contribution  to  any 
sect,  little  or  much,  or  he  may  refuse  it  altogether. 

This  liberality  seems  to  be  clearly  sanctioned  by 
the  principles  of  justice.  Of  the  various  kinds  of 
religious  faith  which  prevail  in  the  world,  it  seems 
clear  that  at  least  ninety-nine  in  a  hundred  belong 
to  the  one  in  which  they  have  been  educated ;  and 
we  may  confidently  pronounce  a  man  or  woman  to 


THE     PUBLIC     EXPENDITURE.  207 

be  a  Catholic  or  Protestant,  an  Episcopalian,  Presby 
terian,  Methodist,  or  Baptist,  according  to  the  per 
suasion  of  their  parents,  or  those  by  whom  they  were 
brought  up ;  and  in  the  hundredth  case  (of  exception 
to  the  rule),  the  deviation  may  be  traced  to  the  influ 
ence  of  some  ascendant  mind,  or  that  of  some  elo 
quent  tract;  so  that  the  new  tenets  thus  acquired 
have  been  the  result  of  accident  or  chance,  for  which 
the  holder  seems  to  be  as  little  responsible  as  for  a 
disease  caused  by  the  changes  of  the  atmosphere. 

The  same  liberal  course  is  recommended  by  policy. 
It  has  been  found  that  wherever  there  has  been  a 
rule  of  faith  prescribed  by  law,  there  will  be  many 
dissentients,  whom  the  supporters  of  the  national 
creed  will  be  disposed  to  proscribe  and  perhaps  perse 
cute  ;  and,  though  the  power  of  the  law  may  not  be 
pushed  to  that  extreme,  there  will  be  between  the 
favored  sect  and  the  rest  perpetual  jealousy  and 
discord,  very  hostile  to  that  charitj^  which  all  good 
religions  inculcate.  No  wars  have  been  so  bitter 
and  implacable  as  those  which  have  grown  out  of 
religious  controversy ;  and  this  abuse  of  power  is  so 
natural,  that  those  who  have  at  one  time  been  the 
victims  of  persecution,  have,  on  the  attainment  of 
power,  become  persecutors  themselves. 

Several  theoretical  objections  have  been  made  to 
the  footing  on  which  religion  is  placed  in  the  United 
States.  It  was  first  supposed  that  where  there  was 
no  legal  restraint  on  religious  controversy,  it  would 


208  POLITICAL     ECONOMY. 

be  more  frequent  and  violent.  But  experience  has 
shown  that,  where  all  sects  enjoy  equal  freedom  and 
privileges,  there  will  be  harmony,  or  at  least  no  dis 
turbance  of  the  public  peace. 

It  being  found  that  the  first  objection  had  been 
completely  falsified,  it  was  then  urged  that  religious 
zeal,  not  having  here  the  stimulants  and  support 
which  prevail  in  other  countries,  would  gradually 
languish  and  die.  But  this  prediction  has  been 
equally  contradicted  by  experience.  The  emulation 
among  the  different  sects  for  popular  favor  and  suc 
cess,  has  been  found  sufficient  to  produce  as  much 
fervor  in  this  country  as  in  any  other.  The  entire 
dependence  of  every  minister  on  his  congregation  for 
his  worldly  support,  as  well  as  for  his  efficiency,  has 
an  obvious  influence  on  his  zeal,  his  diligence,  and 
outward  deportment ;  and  the  people  exercise  their 
acknowledged  power  of  censorship  earnestly  and  un 
remittingly.  There  is  no  country  where  the  minis 
ters  of  religion  are  more  moral,  more  attentive  to  the 
decorums  of  life,  or  exercise  more  practical  charity — 
none  in  which  they  allow  themselves  less  latitude 
of  personal  indulgence. 

In  the  third  place,  it  was  presumed  that  the  clergy 
would  not  be  sufficiently  provided  for  when  they  were 
wholly  dependent  on  voluntary  contribution.  But  it 
is  found  that  the  number  of  churches  and  of  persons 
composing  their  congregations  is  as  great  here  as  it  is 
in  most  countries  of  Europe ;  and,  although  no  min- 


THE     PUBLIC     EXPENDITURE.  209 

isters  here  receive  as  large  salaries  as  are  received 
there  by  the  higher  dignitaries  of  the  church,  most 
of  them  obtain  more  liberal  remuneration  than  the 
great  body  of  the  European  clergy.  A  moderate  but 
competent  salary  is  more  favorable  to  true  and  heart 
felt  piety  than  either  an  overgrown  income,  so  likely 
to  nourish  ambition,  vanity,  and  self-indulgence,  or 
a  very  small  one,  in  which  the  pressure  of  want  may 
engross  the  thoughts  and  cares  of  the  minister. 

Lastly,  it  has  been  supposed  that  the  entire  depend 
ence  of  every  religious  minister  on  the  contributions 
of  his  congregation  would  beget  in  him  a  time-serving 
spirit,  and  check  that  free  animadversion  on  immo 
rality  and  vice  which  is  one  of  his  highest  duties  as 
well  as  most  important  services.  But  here,  again, 
experience  lends  its  refutation.  It  is  found  that 
there  is  no  way  in  which  a  preacher  can  so  well  re 
commend  himself  to  his  flock  as  by  an  earnest  and 
uncompromising  denunciation  of  moral  delinquency 
and  vice,  provided  it  be  not  personal ;  and  no  one 
could  take  umbrage  at  censures  of  this  general  char 
acter  without  bringing  himself  into  discredit. 

It  seems  not  improbable  that  the  entire  freedom 
of  religion  is  favorable  to  the  multiplication  of  sects. 
Whenever  the  ambition  of  being  the  founder  of  a 
sect,  the  desire  of  celebrity,  or  the  mere  love  of  no 
velty  prompts  a  minister  to  promulgate  new  doc 
trines,  or  to  recommend  new  forms  of  worship,  he 
has  much  to  encourage  him  in  his  purpose  in  the  un- 
18*  o 


210  POLITICAL     ECONOMY. 

restrained  freedom  which  prevails  here  in  all  matters 
of  conscience ;  and  if  he  has  eloquence  as  well  as 
zeal,  he  sometimes  becomes  the  founder  of  a  sect 
which  bears  his  name. 

A  question  has  sometimes  arisen  whether,  when 
the  doctrines  or  practice  of  a  religious  sect  are 
directly  opposed  to  the  admitted  policy  of  the  coun 
try,  or  to  the  national  habits  and  manners,  these 
irregularities  were  not  amenable  to  the  laws.  This 
is  a  question  of  great  delicacy,  and  is  always  likely 
to  offend  that  sense  of  religious  freedom  which  the 
fundamental  laws  of  the  State  secure  to  every  man. 
The  case  of  the  Mormons,  in  the  territory  of  Utah, 
whose  religion  permits,  and  even  enjoins,  polygamy, 
has  especially  suggested  this  question  to  the  Ameri 
can  people ;  and  the  general  Government  may  be 
soon  called  upon  to  act  on  it. 

The  polygamy  thus  sanctioned  and  practised  by 
them  is  not  only  abhorrent  to  the  manners  of  the 
people  in  all  the  States,  but  it  is  punished  by  them 
as  a  high  crime.  Although  it  may  be  deemed  incom 
patible  with  the  rights  of  popular  sovereignty,  as  well 
as  of  religious  freedom,  to  attempt  to  put  down  this 
practice  by  force,  or  by  penalties,  yet  the  other  States 
may  be  well  justified  in  refusing  to  admit  into  their 
confederacy  a  community  which  openly  justifies, 
under  the  authority  of  religion,  a  practice  which  they 
consider  so  repugnant  to  morality,  purity  of  manners, 
and  social  happiness.  Not  to  concede  this,  would  be 


THE     PUBLIC     EXPENDITURE.  211 

to  make  the  Mormons  not  merely  the  equals,  but  the 
superiors  of  other  States,  in  extending  to  them  the 
same  toleration  for  their  crimes  as  their  rights.  The 
power  of  granting  to  a  community  admission  into  the 
Union  implies  the  right  of  rejection  whenever  such 
considerations  as  the  national  liberty,  the  national 
morality,  or  happiness  require  it. 


CHAPTER  XVII. 

EDUCATION. 

OF  all  the  political  institutions  which  the  wit  of 
man  has  devised,  none  seems  to  be  of  so  much  im 
portance  as  those  which  provide  for  juvenile  instruc 
tion.  The  duties  of  a  citizen  in  a  civilized  commu 
nity  are  so  multifarious,  and  many  of  them  require 
so  much  previous  training,  that,  unless  a  considerable 
portion  of  his  early  life  is  given  to  the  preparation, 
he  is  incapable  of  performing  many  of  the  most  im 
portant  duties  and  offices  of  a  citizen.  We  may  form 
some  idea  of  the  value  of  this  instruction  by  com 
paring  a  well-educated  man  with  one  who  can  neither 
write  nor  read. 

But  education  not  only  adds  to  a  man's  stock  of 
knowledge,  both  of  matter  and  mind,  but  is  also 
favorable  to  his  morals.  Experience  teaches  us  that, 
in  all  communities  where  the  people  are  generally 
instructed,  they  are  remarkably  exempt  from  crime ; 
and,  though  it  may  often  happen  that  those  persons 
whose  minds  have  been  much  cultivated  are  depraved 
and  unprincipled,  and  have  yielded  to  the  fascina 
tions  of  some  seductive  vice ;  yet  these  must  be  re 
garded  as  exceptions  to  the  general  rule.  A  taste 

(212) 


EDUCATION.  213 

for  literature  and  science  affords  one  of  the  best  se 
curities  against  the  temptations  to  vicious  indulgence, 
and  cherishes  the  generous  ambition  to  acquire  the 
approbation  and  esteem  of  other  men. 

Mental  acquirements  also  afford  profitable  employ 
ment  to  numbers  who  possess  no  other  capital  than 
their  intellects.  How  many  thousands  of  our  cler 
gymen,  physicians,  lawyers,  and  others,  earn  liberal 
incomes,  and  obtain  a  high  station  in  society,  who 
started  in  life  without  a  penny,  and,  in  some  cases, 
without  a  friend  !  It  is  not  only  from  the  educated 
class  that  our  statesmen,  legislators,  and  chief  public 
functionaries  are  furnished,  but  likewise  all  those  who 
fill  the  learned  professions,  or  who  conduct  the  press, 
and  even  our  military  and  naval  affairs.  When  edu 
cation  is  so  indispensable  to  the  community,  and  can 
effectuate  so  much  for  individuals,  it  is  no  wonder 
that  it  is  one  of  the  first  concerns  of  an  intelligent 
people,  and  that  millions  are  set  apart  to  defray  its 
expense.  It  is  thus  regarded  as  the  highest  eulogy 
which  can  be  bestowed  on  any  government,  whether 
it  be  a  republic  or  monarchy,  that  it  has  an  efficient 
system  of  juvenile  instruction. 

The  various  and  diverse  duties  of  an  individual  in 
a  community  seem  to  divide  it  into  three  classes : 
one  for  the  great  mass  of  the  people,  whose  chief 
occupation  is  that  of  physical  labor,  or  of  household 
service ;  the  second  for  those  who  require  a  higher 
degree  of  knowledge  of  men  and  things  in  discharg- 


214  POLITICAL     ECONOMY. 

ing  the  duties  of  agriculturists,  merchants,  and  arti 
ficers  -,  and  lastly,  colleges  and  universities,  in  which 
a  yet  higher  degree  of  science  is  taught,  to  fit  men 
for  the  more  difficult  duties  of  the  higher  offices  of 
government,  and  of  the  learned  professions. 

In  the  first  class,  the  elementary  schools,  the  child 
should  be  taught  to  read  and  write,  the  rudiments  of 
arithmetic,  geography,  and  practical  geometry,  and, 
if  possible,  of  physical  science.  It  is  of  especial  im 
portance  in  a  republic  that  this  class,  comprehending 
the  great  body  of  voters,  should  be  instructed,  that 
they  may  not  only  learn,  through  the  press,  the  opi 
nions  of  the  men  for  whom  they  are  called  upon  to 
vote,  but  be  better  able  to  j  udge  of  the  soundness  of 
those  opinions,  as  well  as  of  the  other  qualifications 
of  the  candidates.  These  schools  should  be  sup 
ported  at  the  people's  expense,  with  the  aid  of  those 
who  could  afford  contributions. 

The  second  class,  that  of  academies,  should  also 
receive  some  support  from  the  public  treasury,  but  be 
dependent  principally  on  the  contributions  of  those 
who  profit  by  them.  The  subjects  taught  here 
should  be  chiefly  classical  learning  and  mathematics, 
and,  in  part  for  those  who  would  there  finish  their 
education,  the  most  useful  branches  of  physical 
science. 

The  third  class,  that  of  colleges  and  universities, 
should  afford  opportunity  to  acquire  every  branch  of 
learning  and  science.  These  higher  schools  should 


EDUCATION.  215 

be  provided  at  the  public  expense,  be  furnished  with 
a  complete  apparatus,  and  the  requisite  materials  for 
experiments,  with  ample  libraries,  with  museums  of 
the  diversified  products  of  nature,  mineral,  animal, 
and  vegetable,  and  lastly,  with  a  fund  for  the  com 
pensation  of  professors,  sufficient  to  secure  the  ser 
vices  of  the  ablest  men ;  and,  to  stimulate  their  unre 
mitting  industry,  their  emolument  should  be  derived 
partly  from  a  fixed  salary,  and  partly  from  the  fees 
paid  by  their  respective  students. 

It  is  found  in  the  United  States  that  the  number 
of  those  now  taught  in  the  primary  or  elementary 
schools  is  about  ten  or  twelve  times  as  many  as  those 
taught  in  the  academies;  and  that  the  latter  are  nearly 
ten  times  the  number  of  college  students. 

In  1850,  according  to  the  census,  there  were  234 
colleges  and  universities  in  the  United  States.  The 
number  of  students  attending  them  was  27,159. 
"When  it  is  recollected  that  the  greater  part  of  those 
students  continue  two  or  three  years  at  college,  so  as 
to  make  the  whole  number  annually  educated  not 
more  than  ten  or  twelve  thousand — that  if  we  farther 
deduct  from  this  number  those  who  are  neither  office 
holders  nor  professional  men,  and  those  who  prema 
turely  die,  the  residue  bears  so  small  a  proportion  to 
the  whole  class  of  those  who  were  supported  by 
mental  industry,  including  the  higher  public  officers, 
which  was  179,000 — it  may  be  fairly  inferred  that  a 


216  POLITICAL    ECONOMY. 

large  majority  of  the  public  officers  and  professional 
men  have  not  received  a  college  education. 

In  our  notice  of  this  subject,  we  must  not  overlook 
the  education  of  females.  When  we  consider  how 
large  a  share  mothers  have  in  forming  the  minds  and 
morals  of  their  children,  and  how  many  great  men 
have  owed  their  eminence  to  maternal  teaching  and 
influence,  we  must  be  satisfied  that  female  instruction 
must  have  a  most  important  bearing  on  the  improve 
ment  and  prosperity  of  a  State.  The  seminaries  and 
boarding-schools  for  the  education  of  females  have 
greatly  multiplied  of  late  years,  and  are  steadily  in 
creasing.  But  the  prevalent  systems  of  female  edu 
cation  seem  to  be  defective  in  this,  that  they  set  a 
higher  value  on  mere  accomplishments  that  may  give 
a  transient  distinction,  than  on  those  solid  qualifica 
tions  which  best  fit  females  for  the  performance  of 
the  high  duties  assigned  to  them. 

These  duties  are  to  manage  a  household  prudently 
and  efficiently;  to  be  the  intelligent  counsellor,  as 
well  as  agreeable  companion  of  the  partner  of  their 
fortunes ;  to  develop  and  improve  the  mental  facul 
ties  and  moral  propensities  of  their  offspring.  To 
such  elevated  attributes,  skill  in  music,  drawing,  or 
dancing,  though  they  too  are  not  without  their  use, 
are  of  subordinate  importance.  Nor  should  the  edu 
cation  of  a  female  be  considered  complete  without 
some  knowledge  of  chemistry,  so  far  as  it  is  applicable 
to  the  ordinary  concerns  of  life,  and  to  the  details  of 


EDUCATION.  217 

practical  cookery,  which  is  of  so  much  value  to  our 
health,  to  our  comfort,  and  to  a  proper  economy.  The 
use  of  the  needle  seems  to  be  so  indispensable  that  it 
is  rarely  ever  neglected,  though  much  of  the  heaviest 
part  of  this  labor  is  now  fortunately  consigned  to 
machinery. 

There  are  some  professions  and  trades  from  which 
women  have  been  hitherto  excluded,  but  for  which 
they  seem  to  be  entirely  competent.  They  are  well 
qualified  for  some  branches  of  the  medical  art,  espe 
cially  for  the  diseases  of  their  own  sex ;  and  they  are 
peculiarly  adapted  to  the  office  of  nursing,  which,  in 
many  diseases,  when  associated  with  intelligence, 
affords  the  most  efficient  aid  that  can  be  given. 
They  are  also  excellent  shop-keepers ;  are  as  efficient 
as  men  in  the  business  of  printing,  book-binding,  in 
some  branches  of  jewelry,  and  in  every  branch  of 
making  clothes.  They  seem  perfectly  competent  to 
exercise  the  profession  of  painting,  engraving,  and 
other  branches  of  the  imitative  arts;  and,  for  the 
business  of  juvenile  instruction,  their  gentleness,  pa 
tience,  and  delicate  sympathy,  peculiarly  fit  them, 
since  the  stimulus  of  the  desire  to  learn,  which  they 
are  so  skilled  in  calling  forth,  is  much  more  efficacious 
than  that  of  fear,  to  which  male  teachers  so  frequently 
appeal. 

A  system  of  general  juvenile  instruction,  compre- 
nending  the  youth  of  both  sexes,  cannot  be  too  much 
cherished  by  a  wise  community.     Under  its  expan- 
19 


218  POLITICAL    ECONOMY. 

sive  and  growing  influence  a  nation  would  be  continu 
ally  advancing  in  knowledge,  in  power  over  brute 
matter,  in  the  means  of  happiness,  and  in  moral 
dignity. 

On  the  subject  of  improving  the  intelligence  of  a 
people,  we  cannot  overlook  the  agency  of  the  peri 
odical  press.  By  its  communicating  to  all  who  can 
read,  on  terms  that  are  within  the  reach  of  the  poorest 
classes  of  the  community,  every  man  can  obtain  a 
knowledge  of  all  important  events  and  facts,  not  only 
in  his  own  country,  but  almost  of  every  other,  imme 
diately  after  they  have  occurred ;  and,  although  the 
newspapers  sometimes  give  currency  to  what  is  false, 
yet  they  probably  circulate  an  hundred  times  as  much 
truth  as  falsehood.  They  are  thus  adding  to  that 
knowledge  of  men  and  things  which  is  generally  ac 
quired  only  by  observation  and  experience.  They 
afford  daily  gratification  to  man's  love  of  novelty; 
save  many  not  only  from  ennui,  but  from  vicious  in 
dulgences  ;  and  do  much  to  superinduce  a  taste  for 
reading  and  intellectual  improvement. 


CHAPTER    XVIII. 

PUBLIC   CHARITIES. 

IN  every  country,  however  rich  or  prosperous,  the 
great  mass  of  the  people  have  an  expenditure  which 
is  equal  to  their  income,  and  is  not  easily  capable  of 
reduction.  They  are,  of  course,  unprepared  for  those 
diseases  or  sinister  casualties  that  put  an  end  to  their 
daily  earnings,  either  permanently  or  for  the  time. 
Humanity  then  requires  that  provision  should  be 
made  for  the  relief  of  those  who  are  thus  afflicted,  out 
of  the  revenues  of  the  more  fortunate  classes.  Hos 
pitals  are  therefore  provided  with  adequate  funds,  and 
are  placed  under  the  management  of  a  competent  and 
permanent  board  of  directors. 

The  class  of  persons  whose  misfortunes  thus  ad 
dress  themselves  to  the  sympathies  of  the  community 
are  the  blind,  the  deaf  and  dumb,  the  insane,  those 
who  have  been  maimed,  or  afflicted  with  diseases 
that  unfit  them  for  labor,  and  lastly,  those  who  are 
too  poor  for  the  maintenance  of  themselves  and  their 
families;  which  last  class  will  require  a  separate 
consideration. 

Of  the  claims  of  the  four  first  classes  to  relief, 

(219) 


220  POLITICAL     ECONOMY. 

there  can  be  no  doubt ;  and  the  only  question  is  as 
to  the  extent  and  mode  of  assistance. 

Though  there  is  not  entire  uniformity  in  the  pro 
portion  of  persons  thus  afflicted,  yet  the  diversity 
appears  to  be  not  very  great;  and  it  would  seem, 
from  the  decennial  census  of  the  population  of  the 
United  States  and  of  other  countries,  that  about  one 
in  2000  persons  is  probably  blind,  that  the  proportion 
of  the  deaf  and  dumb  is  the  same,  and  that  one  in 
1000  is  insane ;  making,  in  the  three  classes,  three 
in  5000 — equivalent  to  six-tenths  of  one  per  cent,  of 
the  whole  population.  The  number  of  those  who 
are  incapable  of  supporting  themselves  either  by  their 
labor  or  capital,  in  consequence  of  being  maimed  or 
diseased,  is  not  ascertained ;  but  it  is  probably  much 
larger  than  that  of  either  of  the  other  classes.  If 
we  suppose  it  to  be  as  much  as  two  in  the  1000,  it 
would  make  the  whole  number  who  have  undeniable 
claims  to  the  public  charity  reach  five  in  the  5000, 
or  one  per  cent  of  the  whole  population ;  which  im 
poses  not  a  burthensome  charge  on  the  community. 

The  claim,  however,  of  those  who  are  merely  poor, 
but  who  have  experienced  neither  disease  nor  infirm 
ity  to  disqualify  them  for  bodily  labor,  is  another 
question. 

It  has  been  contended  by  many,  ever  since  Mr. 
Malthus's  work  on  the  tendency  of  mankind,  by  their 
increase,  to  press  on  the  means  of  subsistence,  that  a 
general  system  of  providing  relief  for  those  who  are 


PUBLIC     CHARITIES.  221 

merely  poor,  tends  to  increase  the  very  evil  it  aimed 
to  remedy;  and  that  if  individuals,  regardless  of 
those  considerations  of  prudence  which  should  pre 
vent  them  from  encumbering  themselves  with  fami 
lies  without  possessing  the  means  of  their  support, 
and  the  public  should  be  ready  to  supply  the  relief 
needed  by  such  imprudence,  then  one  of  the  most 
efficient  checks  to  redundancy  of  numbers  would  be 
taken  away;  that  cases  of  such  improvident  mar 
riages  would  probably  be  multiplied,  and  the  evils  of 
poverty  and  want  be  thereby  augmented ;  that,  con 
sequently,  the  only  system  which  will  keep  down 
population  to  the  level  of  comfortable  subsistence,  is 
to  let  the  imprudent  take  the  consequences  of  their 
own  error,  rather  than  to  cast  its  results  on  the  rest 
of  the  community. 

The  principle  that  population  will  always  be  in 
proportion  to  the  means  of  subsistence  had  been  pro 
pounded  by  Sir  James  Steuart,  Adam  Smith,  Dr. 
Franklin,  and  probably  others,  long  before  Mr.  Mal- 
thus ;  but  he  was  the  first  who  traced  its  influence 
on  human  welfare.  While  I  readily  admit  the  ability 
and  value  of  Mr.  Malthus's  work,  it  has  long  appeared 
to  me  that  he  has  somewhat  overrated  the  multiplying 
propensity  of  mankind,  which  I  do  not  think  too  strong, 
and  has  undervalued  the  checks  to  redundancy.* 

*  These  propositions  are  made  by  the  author  only  after  mature 
consideration.  But  the  exhibition  of  his  views  would  require 
more  space  than  is  consistent  with  the  plan  of  this  little  work. 


POLITICAL    ECONOMY. 

But  this  doctrine  is  of  too  cold  and  heartless  a 
nature,  too  repugnant  to  our  natural  sympathies,  to 
be  readily  adopted.  It  confounds  imprudence  with 
depravity,  and  inflicts  the  punishment  due  to  moral 
delinquency  on  those  who  have  yielded  to  the  strong 
est,  and  sometimes  the  best,  impulses  of  our  nature. 
Accordingly,  the  policy  it  recommends  has  no  where 
been  carried  into  strict  execution. 

But  while  such  attempts  to  repress  our  natural 
sympathy  with  human  suffering  may  be  equally  ob 
jectionable  and  vain,  both  humanity  and  a  regard  to 
the  interests  of  society  require  us  to  lessen  the  occa 
sions  of  sympathy  as  far  as  practicable.  If  any 
feasible  plan  could  be  devised  to  prevent  very  early 
and  imprudent  marriages,  the  evil  would  be  pre 
vented;  but  it  is  apprehended  that  any  legal  re 
straints  on  marriages  beyond  those  now  existing 
might  do  more  harm  than  good ;  and  that  the  poverty 
which  they  too  often  produce  cannot  be  entirely  pre 
vented,  and  admits  of  but  partial  remedy. 

For  those  who  are  able  to  work  but  cannot  find 
profitable  employment,  work-houses  should  be  pro 
vided,  with  the  requisite  materials  and  tools,  where 
any  healthy  man  or  woman  may  engage  in  some 
useful  species  of  labor,  or  in  those  simpler  trades 
which  require  little  or  no  preparation. 

As  relief  to  the  poor  is  often  a  heavy  charge  on 
the  community,  adequate  provision  should  be  made 
for  its  payment.  The  money  is  more  conveniently 


PUBLIC     CHARITIES.  223 

raised  by  a  direct  tax,  as  by  a  land  or  income  tax. 
Aid,  however,  may  be  drawn  from  indirect  taxes, 
laid  on  whatever  contributes  to  encourage  idleness 
and  waste,  and  to  impoverish  individuals.  Thus, 
gaming  and  drinking  houses  might  be  made  to  assist 
in  relieving  the  evils  they  had  fostered. 

But  nothing,  it  must  be  remembered,  is  so  likely 
to  lessen  the  number  of  the  poor,  as  a  good  system 
of  popular  education,  good  government,  and  good 
laws ;  w^hich  cherish  individual  self-respect,  an  earnest 
desire  of  independence,  and  an  industry  free  to  exer 
cise  itself  in  any  way.  It  is  thus  that  we  see  the 
number  of  poor  who  are  supported  by  other  members 
of  the  community  smaller  in  this  country  than  in  any 
other,  and  that  their  pressure  is  most  felt  in  those 
States  in  which  are  the  greatest  number  of  immi 
grants. 


CHAPTER  XIX. 

ROADS   AND  CANALS. 

A  LARGE  part  of  the  labor  of  every  country,  as  we 
have  seen,  is  expended  in  transporting  commodities 
from  the  place  of  production  to  the  place  of  consump 
tion  ;  and  whatever  can  be  saved  of  this  expense  is 
so  much  added  to  the  net  national  income.  Hence 
the  great  benefit  of  roads  and  canals.  The  advan 
tage  to  the  public  is  shown  by  the  gain  to  individuals. 
Thus,  suppose  that,  by  reason  of  the  badness  of  a 
road,  a  wagon  can  transport  but  twenty  barrels  of 
flour  one  hundred  miles  in  eight  days,  and  that,  by 
improvements  of  the  road,  such  as  making  it  more 
level,  or  firm,  or  smooth,  the  same  wagon  could  trans 
port  thirty  barrels  the  same  distance  in  four  days ; 
the  cost  of  transport  would  then  be  reduced  to  one- 
third  of  its  previous  cost,  with  more  ease  to  the 
horses,  and  less  wear  and  tear  of  the  wagon. 

These  useful  public  works  are  sometimes  made  at 
the  expense  of  the  State ;  but  it  has  been  found  that 
the  public  is  better  accommodated  with  roads  when 
the  right  of  making  them  is  given  by  charter  to  joint- 
stock  companies,  who  are  permitted  to  charge  tolls 

(224) 


ROADS     AND     CANALS.  225 

on  the  road  or  canal ;  so  that  their  cost  is  in  fact 
paid  by  those  who  have  the  benefit  of  them. 

The  advantage  of  the  modern  railroad  is  yet  greater, 
when  the  articles  to  be  transported  are  sufficient  to 
repay  their  great  cost.  There  are  only  particular 
situations  which  are  adapted  to  this  species  of  trans 
portation.  These  are,  first,  where  there  are  many 
persons  travelling  to  and  fro,  the  saving  of  the  tra 
veller's  time  and  expense,  enabling  them  to  charge 
him  with  a  high  fare.  This  is  a  great  source  of  the 
profit  of  railroads  on  all  the  great  thoroughfares  of 
travel.  Secondly,  where  there  is  a  large  and  unin- 
termitted  supply  of  a  commodity  to  be  transported ; 
as  of  fossil  coal  to  a  city  or  shipping  port,  iron,  lead, 
or  other  mineral,  from  the  mine  to  its  market. 
Thirdly,  for  the  general  transportation  between  a 
populous  city  of  agricultural  products  on  one  part, 
and  of  foreign  or  manufactured  goods  on  the  other. 

In  all  these  cases  railroads  are  most  valuable  insti 
tutions.  They  benefit  both  the  producing  and  the 
consuming  classes ;  they  enlarge  as  well  as  improve 
the  markets  for  every  species  of  industry,  and  yield 
a  fair  profit  to  the  capital  by  which  they  have  been 
constructed  and  are  maintained. 

These  obvious  advantages,  however,  have  not  sel 
dom  tempted  men  to  make  railroads  where  they  were 
not  wanted,  or  were  premature,  and  where,  conse 
quently,  they  have  occasioned  a  waste  of  the  national 
stock.  The  instances  of  these  improvident  under- 

p 


226  POLITICAL     ECONOMY. 

takings  have  been  so  numerous  in  the  United  States 
as  to  deduct  largely  from  their  acknowledged  benefits. 
The  advantage  of  canals  in  facilitating  the  trans 
portation  of  bulky  commodities  is  yet  greater.  The 
far  greater  quickness  of  transport  by  railroads  than 
by  canals  fits  the  former  for  the  carrying  of  valuable 
merchandise,  in  which  the  requisite  saving  of  time  is 
important,  as  well  as  in  the  transportation  of  per 
sons  ;  but  where  great  expedition  is  not  important, 
canal  transportation  is  far  cheaper.  It  is  commonly 
reckoned  that  its  cost  per  mile  is  from  a  third  to  a 
half  of  that  on  railways.  One  cause  of  the  greater 
cheapness  is  that  they  are  kept  up  at  less  expense  — 
the  first  cost  of  a  railroad  requiring  perpetual  re 
newal,  after  short  terms ;  another  is,  that  the  expense 
of  working  them,  and  the  wear  and  tear  of  the  ma 
chinery  used  on  them,  is  much  greater.  But,  as 
there  must  be  a  large  perennial  supply  of  water  for 
a  canal,  there  are  only  particular  situations,  corre 
sponding  to  the  natural  streams  of  a  country,  where 
canals  are  practicable.  Eailroads,  however,  can  be 
made  anywhere,  and  now  impart  the  benefits  of  a 
comparatively  cheap  transportation  to  places  to  which 
it  was  formerly  denied. 


INDEX. 


A, 

Agricultural  industry,  at  first  rude,  78 ;  its  progress,  78 ;  the  price 

of  raw  produce  and  labor,  how  affected,  79 ;  the  principal  source 

of  raw  produce,  92. 

Agricultural  State,  how  it  originated,  51. 
Air,  when  it  has  exchangeable  value,  36. 
America,  its  discovery  lowered  the  price  of  gold  and  silver,  40, 105; 

labor  dearer,  and  raw  produce  cheaper,  than  in  Europe,  79 ; 

the  precious  metals  cheaper  here  than  in  Europe,  156. 
Armies,  necessary  to  national  defence,  197;  objects  of  jealousy  to  a 

free  people,  197;  volunteers  an  efficient  substitute,  198. 
Auctions,  why  a  proper  subject  of  taxation,  194. 
Australia,  effect  of  its  gold  mines,  155,  165. 

B, 

Balance  of  trade,  error  of  the  mercantile  system  on  this  subject, 
118;  it  sometimes  indicates  the  profits  of  commerce,  114; 
sometimes  the  indebtedness  of  a  nation,  114. 

Banks,  two  kinds,  170;  of  deposit,  170;  the  Bank  of  Amsterdam 
the  most  distinguished,  170;  few  instances,  171;  some  think 
they  would  furnish  the  safest  paper  currency,  180;  objections, 
180. 

BanJcs  of  circulation,  how  created,  171;  the  source  of  their  profits, 
171 ;  are  commonly  banks  of  deposit  and  of  discount,  171 ;  the 
proportion  of  specie  they  aim  to  keep,  172 ;  their  utility  in  a 
commercial  country,  173;  their  occasional  mischiefs,  173;  ex 
cess  of  their  issues  in  1836,  174;  in  1857, 175;  their  ordinary 
regulations,  175 ;  business  paper  and  accommodation  paper ? 

(227) 


228  INDEX. 

Banks  of  Circulation. 

176:   small  notes,  176;   restrictions  to  which  they  should  be 

subjected,  177;  objections  to  the  system  of  "free  banks,"  179; 

they  are  commonly  taxed,  191. 
Blind,  the,  proper  objects  of  public  charity,  219;  their  proportion 

to  the  whole  population,  220. 

c, 

California,  effect  of  its  gold  mines,  155,  164,  165,  166;  their  pro 
duct,  169. 

Canals,  their  cheapness  of  transportation,  224 ;  best  mode  of  making 
and  maintaining  them,  224 ;  afford  cheaper  transport  than  rail 
roads,  226 ;  they  cannot  be  made  in  all  places,  226. 

Capital,  what,  133 ;  how  it  contributes  to  production,  133 ;  two 
kinds,  135;  fixed,  what,  135;  circulating,  what,  135;  its  profits 
the  same  as  the  interest  of  money,  136;  what  regulates  the 
rate  of  interest,  139;  inquiry  into  its  minimum  rate,  146; 
foreign  capital  may  be  profitably  employed,  148. 

Capitation  taxes,  objections  to  them,  194. 

Census  of  the  United  States,  shows  the  gradual  diminution  in  the 
number  of  children,  81. 

Charities,  public,  what  are  the  proper  objects  of  them,  219 ;  provi 
sion  for  the  poor  considered,  220. 

China,  cheapness  of  labor  there,  92 ;  interest  high,  138 

Cities  and  towns,  their  origin,  62 ;  their  proportional  population  in 
different  countries,  62 ;  their  benefits  and  disadvantages)  63 ; 
on  what  depends  the  value  of  their  lots,  63. 

Coal,  mines  of,  their  great  national  value,  69 ;  sometimes  yield  a 
high  rent,  70. 

Coin,  its  origin,  161 ;  its  denominations,  161 ;  the  binary  divisions 
preferred  to  the  decimal,  161;  two  reasons  for  using  alloy,  162; 
why  it  should  pay  a  seignorage,  162 ;  profit  on  those  of  copper, 
164 ;  will  circulate  without  being  a  legal  tender,  164 ;  its  wear 
and  tear,  167. 

Commerce,  arises  from  diversity  of  products  in  different  countries, 
109  ;  how  affected  by  cost  of  transport,  110 ;  its  contributions 
to  human  comfort  illustrated,  111;  its  different  classes,  112; 


INDEX.  229 

Commerce. 

some  branches  require  peculiar  integrity,  112 ;  its  gains  have 
been  differently  estimated,  113 ;  error  of  the  mercantile  system, 
113 ;  commonly  the  imports  of  more  value  than  the  exports, 
114 ;  the  difference  sometimes  shows  profits,  and  sometimes 
the  debt,  114;  it  furnishes  part  of  the  manufactures,  116; 
this  employs  domestic  industry,  116;  arguments  urged  in  favor 
of  each  mode,  116. 

Consumption,  the  end  of  production,  184;  equal  to  the  production, 
with  a  small  exception,  185;  this  partly  by  individuals  and 
partly  by  the  Government,  185;  the  principal  modes  in  which 
the  Government  consumes,  205. 

Co-operation  of  labor,  its  advantages  shown  in  pin-making,  94; 
the  gain  attributed  to  three  circumstances,  95;  capital  is  essen 
tial  to  it,  134. 

Cotton,  its  culture  increased  by  the  saw-gin,  96;  correspondent  im 
provements  in  the  machinery  for  spinning  and  weaving  it,  96 ; 
extraordinary  reduction  in  the  price  of  its  fabrics,  96;  the  value 
of  slaves  in  the  United  States  thereby  raised,  90 ;  this  effect 
must  cease  after  one  or  two  duplications,  90. 

Custom,  its  influence  on  the  price  of  some  species  of  labor,  104. 

D, 

Deaf  and  dumb,  proper  objects  of  public  charity,  219 ;  their  pro 
portional  number,  220. 

Debts,  public,  a  resort  in  seasons  of  emergency,  199 ;  sometimes  the 
result  of  national  contracts,  199 ;  they  are  generally  made  from 
the  capital  that  is  least  productive,  200 ;  they  lighten  present 
burdens  to  make  the  future  heavier,  200 ;  funding  the  debt, 
what,  200 ;  in  time  the  interest  on  them  may  equal  the  expense 
of  the  Government,  200;  they  always  impair  the  national 
capital,  but  lessen  that  which  can  be  best  spared,  201 ;  differ 
ence  between  private  and  public  debts,  202 ;  different  modes 
of  relief  from  them,  203 ;  the  United  States  a  solitary  example 
of  paying  off  a  large  public  debt,  203 ;  one  nation  may  owe 
another  a  large  debt  by  the  dealings  of  individuals,  203 ;  the 
effects,  203. 

20 


230  IXDEX. 

Demand,  what,  89;  how  price  is  affected  by  an  increased  or  dimin 
ished  demand,  39 ;  how  demand  is  affected  by  change  of  de 
mand,  40;  a  precise  and  certain  demand  for  most  articles,  41. 

Dentists  the  utility  of  their  art,  123;  their  great  multiplication,  123. 

E, 

Education,  its  great  importance,  212 ;  it  is  favorable  to  morals,  212 ; 
a  source  of  wealth  and  station,  213 ;  three  classes  of  schools, 
213 ;  their  several  purposes,  214 ;  the  numbers  of  each,  215 ; 
that  of  females  highly  important,  216 ;  wherein  it  is  defective, 
216;  the  periodical  press  a  great  source  of  popular  instruction, 
218 ;  affords  the  best  security  against  pauperism,  223. 

Engineers,  civil,  their  remuneration  commonly  high,  125. 

England,  her  advancement  from  rudeness  to  civilization,  21;  has 
profited  by  long  loans,  67 ;  by  her  mines  of  coal  and  iron,  69 ; 
her  abundant  capital  freely  loaned  to  the  United  States,  115; 
why  the  price  of  her  labor  has  not  declined  with  the  increase 
of  her  numbers,  147 ;  her  capital  employed  in  the  United  States, 
149 ;  the  amount  of  her  specie  per  head,  157. 

Evans,  Oliver,  his  inventions  sometimes  fruitless  for  want  of  capi 
tal,  126. 

Exchange,  the  practice  universal  and  indispensable,  33 ;  no  precise 
test  of  value,  35. 

Exchangeable  value,  what,  35 ;  two  elements,  37. 

Excise,  what,  192;  objections  to  it  in  Pennsylvania,  192. 

Executive,  one  of  the  three  powers  of  Government,  186 ;  its  proper 
functions,  186. 

Expenditure,  public,  in  what  it  principally  consists,  204. 

Exports,  generally  nearly  equal  to  imports  in  value,  114;  a  compa 
rison  between  them  sometimes  shows  the  profits  of  commerce, 
114;  sometimes  the  debts  contracted  by  one  party,  114. 

F, 

Fertility  of  soil,  one  of  the  physical  causes  of  national  wealth,  22 ; 

it  can  be  increased  by  human  industry,  22 ;  a  certain  degree 

necessary  to  rent,  56. 
Fine  arts,  those  who  excel  in  them  are  highly  remunerated,  127. 


INDEX.  231 

Fisheries,  one  of  the  sources  of  raw  produce,  93  ;  they  sometimes 
yield  a  high  rent,  73. 

Food,  animal  and  vegetable  compared  as  to  cost,  81 ;  difference  of 
cost  in  different  species  of  vegetable  aliment,  81. 

France,  her  advancement  from  rudeness  to  civilization,  21 ;  in 
stances  of  her  skill  in  manufactures,  29 ;  amount  of  her  specie 
per  head,  157. 

Free  trade,  arguments  for  and  against  it,  116 

Funding  a  debt,  what,  200. 

G, 

Gluts,  there  may  be  a  redundancy  of  particular  commodities,  but 
can  never  be  of  all,  199. 

Gold,  its  fall  in  value  after  the  discovery  of  America,  40,  165 ;  its 
peculiar  fitness  for  money,  151 ;  its  value  in  the  United  States 
compared  with  that  of  silver,  163 ;  effect  of  the  California  and 
Australian  mines,  165;  their  annual  produce,  165;  the  quan 
tity  of  its  coin  in  the  world,  166 ;  its  annual  consumption,  166. 

Government,  one  of  the  moral  causes  of  national  wealth,  31 ;  its 
power  often  greatly  abused,  31 ;  its  forbearance  one  of  its  best 
attributes,  32 ;  how  its  power  is  distributed,  185 ;  functions  of 
the  legislature,  185;  of  the  Executive,  185;  of  the  judiciary, 
185;  sources  of  its  revenue,  187. 

H, 

Heat,  when  it  has  no  exchangeable  value,  36. 

Houses,  what  regulates  their  rent,  64 ;  taxes  on  them,  190 ;  on 
whom  they  fall,  190. 

Hunter  State,  the  first  step  of  society,  45 ;  its  characteristics,  45 ; 
its  means  of  subsistence  precarious,  47 ;  its  thinness  of  popu 
lation,  48. 

I, 

Imports,  regularly  they  a  little  exceed  the  exports  in  value,  114 ; 

sometimes  their  excess  indicates  the  profits  of  trade,  114; 

sometimes  the  indebtedness  of  the  importers,  114;  a  fit  subject 

for  taxation,  115. 
Imposts,  comparative  advantages  of  this  species  of  tax,  190. 


^.oU  INDEX. 

Improvements  in  husbandry,  tend  to  raise  rents,  58  ;  source  of  erro 
neous  theory  on  this  subject,  59. 

India,  labor  there  very  low,  92  ;  the  rate  of  interest  high,  138. 

Indians,  North  American,  a  type  of  people  in  the  Hunter  State, 
46 ;  their  characteristics,  46 ;  not  likely  to  have  become  pas 
toral,  49. 

Industry,  one  of  the  main  causes  of  national  wealth,  27  ;  its  achieve 
ments,  74;  its  three  great  divisions,  77. 

Insane,  one  of  the  proper  objects  of  public  charity,  219 ;  their  pro 
portional  number,  220. 

Interest  of  money,  indicates  the  profits  of  capital,  181-  was  once 
thought  immoral,  131 ;  cause  of  the  change  in  this  respect, 
131;  why  it  is  high  or  low,  137;  it  commonly  declines  with 
the  increase  of  population,  137;  exceptions  in  India  and  China, 
138 ;  it  is  affected  by  the  character  of  the  employment,  146 ; 
the  minimum  to  which  interest  can  fall,  146. 

Inventors,  why  they  are  often  ill  remunerated,  126. 

Iron,  its  invention  of  immense  benefit  to  agriculture,  51 ;  its 
mines,  70;  its  manufactures,  105. 

J, 

Jefferson,  his  views  on  the  effects  of  slavery,  86. 
Judiciary,  one  of  the  three  principal  powers  of  Government,  186 ; 
its  functions,  186. 

L. 

Labor,  when  it  determines  the  cost  of  production,  37;  tends  to  fall 
with  the  progress  of  population,  54,  79 ;  how  prevented,  81 ; 
the  chief  agent  in  producing  wealth,  72,  131 ;  what  is  the 
minimum  of  its  wages,  82 ;  its  value  in  different  countries,  91 ; 
how  affected  by  climate,  91 ;  by  moral  causes,  91 ;  advantage 
of  its  division  in  manufactures,  94 ;  its  rewards  affected  by  dif 
ference  of  skill,  97;  of  agreeableness  of  its  employment,  98; 
its  respectability,  99 ;  the  moral  qualities  required,  100 ;  its 
steadiness,  101 ;  the  probability  of  success,  102 ;  by  custom, 
104  ;  one  of  the  three  elements  in  manufactures,  104 ;  its  share 
in  different  manufactures,  105. 


INDEX.  233 

Land,  in  the  first  stage  of  society  it  was  held  in  common,  45;  how 
it  acquired  exchangeable  value,  46 ;  when  it  first  became  pro 
perty,  53 ;  it  then  necessarily  afforded  rent,  53  ;  advantage  of 
long  leases,  66 ;  different  modes  of  renting  it,  66 ;  part  of  its 
profits  often  overlooked,  68;  taxes  on  it,  how  regulated,  189. 

Lawyers,  their  remuneration,  what  determines  it,  121. 

Leases,  advantage  of  long,  66 ;  why  short  in  the  United  States,  67. 

Legislature,  one  of  three  powers  of  free  governments,  186;  why 
their  members  should  be  compensated,  128 ;  at  what  rate,  129 ; 
the  compensation  should  always  be  prospective,  130;  the  late 
Act  of  Congress  on  this  subject,  130 ;  remarkable  case  of  popular 
inconsistency,  130. 

Liylit,  when  it  has  exchangeable  value,  36. 

M, 

Machinery,  used  to  advantage  in  the  division  of  labor,  94 ;  its  ad 
vantages  in  saving  labor  illustrated,  95 ;  one  of  the  elements  of 
manufactures,  104. 

Manufactures,  one  of  the  three  great  branches  of  industry,  74 ; 
requires  more  manual  adroitness  than  any  other  species  of 
industry,  94;  they  are  furnished  partly  by  commerce,  116; 
arguments  for  and  against  protecting  the  home-made,  116. 

Mental  labor,  its  importance,  121 ;  its  principal  classes,  123 ;  public 
functionaries,  123;  lawyers,  124;  physicians  and  surgeons,  124; 
the  clergy,  124 ;  teachers,  124 ;  civil  engineers,  125 ;  why  in 
ventors  are  often  ill  rewarded,  125 ;  authors,  126. 

Mercantile  class,  its  divisions,  112 ;  in  what  branches  integrity  is 
peculiarly  required,  112. 

Metayer  rents,  what,  67;  occasional  in  the  United  States,  67;  objec 
tions  to  them,  68 ;  they  succeed  in  some  parts  of  Europe,  68. 

Mines,  one  of  the  physical  sources  of  national  wealth,  24 ;  on  what 
their  rents  depend,  69. 

Mint  of  the  United  States,  its  principal  regulations,  161 ;  seignorage, 
161;  its  double  standard  of  value,  163 

Money,  its  origin,  150;  different  articles  first  used,  150;  the  precious 
metals  preferred,  151;  their  recommendations,  154;  the  quan 
tity  wanted  in  a  country,  155;  mischiefs  of  an  excess,  158; 

20* 


234  INDEX. 

Money. 

of  a  deficiency,  159 ;  its  value  not  altered  in  proportion  to  its 
excess  or  deficiency,  160 ;  the  use  of  paper  lessens  the  amount 
of  specie,  169 ;  more  in  the  nature  of  fixed  than  circulating 
capital,  180. 

Monopolies,  what,  38  ;  different  kinds,  38 ;  what  regulates  the 
price,  38. 

Moral  causes,  those  which  influence  national  wealth,  27. 

Mormons,  how  far  their  tenets  are  to  be  tolerated,  210. 

N, 

Newspapers,  great  sources  of  popular  instruction,  218. 

0, 

Officers,  public,  the  honor  constitutes  part  of  their  remuneration, 
121 ;  how  generally  appointed,  186. 

P, 

Paper  money,  was  used  in  the  British  Colonies  of  North  America, 
154 ;  it  lessens  the  amount  of  specie  circulation,  169 ;  that  issued 
by  the  banks  the  best  substitute  for  specie,  169. 

Pastoral  State,  ordinarily  the  second  stage  of  society,  48 ;  how  it 
originated,  48  ',  not  adapted  to  all  countries,  49 ',  its  character 
istics,  50 ;  its  manufactures,  50 ;  its  population,  50. 

Physicians,  high  intellectual  and  moral  powers  required,  122;  many 
unworthy  pretenders,  122. 

Poor  laics,  their  policy  considered,  220 ',  education  tends  to  lessen 
the  number  of  paupers,  223. 

Population,  in  the  Hunter  State,  48 ;  in  the  Pastoral,  51 ;  in  the 
Agricultural,  52 ;  the  degree  affected  by  the  character  of  the 
food,  80 ;  diversities  of  aliment,  80 ;  check  to  redundancy  in 
the  United  States,  81. 

Precious  metals,  their  value  lowered  by  the  discovery  of  America, 
40, 165 ;  not  to  the  same  extent  as  the  increase  in  quantity,  40, 
165 ;  the  best  materials  for  money,  151 ;  their  recommendation, 
152 ;  substitutes  for  them  in  the  British  Colonies,  153 ;  their 
value  varies  in  different  countries  and  ages,  155 ;  how  distance 


INDEX.  235 

Precious  metals. 

from  the  mines  affects  their  value,  156;  the  quantity  per  head 
in  different  countries,  157;  their  coinage,  161 ;  effects  of  making 
both  metals  standards  of  value,  162 ;  relative  value  of  gold  and 
silver  in  the  United  States,  163 ;  depreciation  lessens  the  supply 
and  increases  the  demand,  168 ;  the  best  measure  of  value  at 
the  same  time  and  place,  168. 

Price,  how  affected  by  supply  and  demand,  88 ;  these  again  are  in 
fluenced  by  price,  41. 

Professors,  their  remuneration,  124. 

Protection,  how  given  to  domestic  products,  116 ;  arguments  for  and 
against  it,  116. 

Public  expenditures,  in  what  they  chiefly  consist,  205. 

Public  revenue,  chiefly  derived  from  taxes,  187;  the  different  spe 
cies  of  taxes,  187. 

R, 

Raw  produce,  rises  in  value  with  the  progress  of  population,  78 ;  its 
rise  implies  the  fall  of  labor,  79 ;  agriculture  is  its  chief  source, 
92 ;  some  also  derived  from  mines  and  fisheries,  92. 

Religion,  free  in  the  United  States,  206;  this  dictated  both  by  justice 
and  policy,  206;  objections  to  its  freedom  answered,  206;  it 
probably  favors  multiplicity  of  sects,  209  ;  how  far  the  tenets 
of  a  sect  may  be  amenable  to  the  laws,  209. 

Rent,  its  origin,  53;  at  first  low,  53;  its  gradual  rise,  54;  some  fer 
tility  of  soil  indispensable,  54 ;  how  affected  by  diversity  of 
soils,  54 ;  by  distance  from  market,  57 ;  by  greater  outlays  of 
capital,  57;  by  improvements  in  husbandry,  58;  by  the  means 
of  transport,  58 ;  it  is  lowered  by  a  decline  of  population,  61 ; 
by  heavy  taxation,  62;  of  houses,  62;  of  town  lots,  62,  64; 
of  mines,  69 ;  of  fisheries,  73. 

Retailers,  one  of  the  mercantile  classes,  112 ;  in  what  species  integ 
rity  of  peculiar  value,  112. 

Revenue,  its  chief  sources,  187. 

Roads  and  Canals,  their  great  utility,  224 ;  best  plan  of  maintaining 
them,  224 ;  they  benefit  both  producers  and  consumers,  225  • 
sometimes  improvidently  made,  225. 


236  INDEX. 

S, 

Salt,  its  utility,  71 ;  its  mines  sometimes  yield  a  high  rent.  71 ;  its 
principal  manufactures  in  the  United  States,  72 ;  it  may  in 
time  be  wholly  supplied  from  the  ocean,  72. 

Say,  his  error  as  to  the  precious  metals,  40;  his  theory  of  gluts,  183. 

Scarcity}  one  of  the  elements  of  exchangeable  value,  35. 

Schools,  three  principal  divisions,  213 ;  the  objects  of  the  Elemen 
tary,  214;  of  the  Academies,  214;  of  the  Colleges  and  Uni 
versities,  216 ;  the  number  of  each,  215 ;  importance  of  female 
instruction,  216. 

Seignorage,  what,  162;  its  reasonableness,  162;  its  advantages, 
162. 

Slavery,  it  prevails  in  nearly  half  the  States  of  the  Union,  83 ;  its 
supposed  disadvantages,  83 ;  effect  of  emancipation  in  Jamaica, 
85;  in  Barbadoes,  85 ;  some  social  benefits,  86;  the  gradual  fall 
of  labor  will  cause  its  termination,  88 ;  probable  term  of  its 
existence,  89. 

Slaves,  in  the  Southern  States,  the  larger  tracts  cultivated  by  them, 
67;  managed  with  great  judgment  and  success  by  some  pro 
prietors,  85 ;  why  the  States  holding  them  are  averse  to  eman 
cipation,  87 ;  their  present  high  price  results  from  the  price  of 
cotton,  90 ;  it  must  decline  as  they  increase,  90 ;  their  number 
in  fifty  years,  90. 

Smithy  Adam,  his  opinion  on  exchange,  33 ;  exposition  of  the  ad 
vantages  of  the  division  of  labor,  94 ;  his  maxims  of  taxation, 
187. 

Smuggling,  encouraged  by  a  high  impost,  191. 

Society,  its  progress,  48 ;  the  Hunter  State,  48  ;  the  Pastoral,  50 ; 
the  Agricultural,  51. 

Standard  of  comfort,  high  in  the  United  States,  81 ;  this  may 
prevent  a  redundancy  of  numbers,  81 ;  its  tendency  already 
perceptible,  81. 

Supply,  what,  38 ;  how  its  changes  affect  price,  39 ;  how  they  affect, 
and  are  affected  by,  demand,  40. 

Surgeons,  why  their  remuneration  is  very  high,  123. 


INDEX.  237 

T, 

Taxes,  the  chief  source  of  public  revenue,  187 ;  should  conform  to 
certain  maxims,  187;  are  sometimes  used  for  other  purposes 
than  revenue,  187;  on  land,  189;  on  houses,  190;  they  fall  on 
tenants,  190 ;  on  imports,  190 ;  excise,  192 ;  on  stamps,  193 ; 
on  banks,  193 ;  on  auctions,  194 ;  capitation,  194 ;  by  means 
of  licenses,  194 ;  on  whom  certain  taxes  fall,  195 ;  direct  and 
indirect  compared,  195;  objections  to  indirect  answered,  195; 
are  sometimes  laid  on  property  of  the  deceased,  197. 

Town  lots,  on  what  depends  their  price  and  rente,  63. 

Transport,  cost  of,  causes  the  difference  of  price  in  different  coun 
tries,  110;  hence  the  importance  of  shipping,  canals,  and  roads, 
110;  improvements  in,  enlarge  the  market,  110;  the  great 
benefit  of  canals  and  roads,  224 ;  how  they  are  best  maintained, 
224 ;  benefit  of  railroads,  225 ;  but  they  may  be  too  much  mul 
tiplied,  225 ;  canals  more  beneficial  than  railroads,  226. 

Turks  Island,  salt  there  made  by  natural  evaporation,  110;  its 
consequent  cheapness,  110. 

u, 

Usury  laws,  their  origin,  141 ;  their  singularity,  141 ;  they  injure 
those  they  were  intended  to  serve,  142 ;  their  repeal,  has  pro 
duced  disappointment,  144;  the  effects  of  their  repeal,  144; 
the  injustice  lessened  by  joint-stock  corporations,  145. 

V. 

Value,  what,  in  Political  Economy,  33 ;  exchangeable  has  two  ele 
ments,  35  ;  when  air,  light,  and  water  have  it,  36 ;  the  difficulty 
of  obtaining  an  article  of  two  kinds,  37;  when  it  is  determined 
solely  by  competition,  37;  it  is  always  liable  to  fluctuation,  38; 
how  affected  by  supply  and  demand,  38 ;  change  of  value  not 
proportional,  38  ;  it  has  no  certain  measure,  42 ;  some  articles 
afford  approximations,  42 ;  when  the  precious  metals  the  best, 
42 ;  they  vary  greatly  in  different  ages  and  countries,  43 ;  of 
labor,  is  a  measure,  43 ;  of  corn,  43 ;  of  labor  and  corn  com 
bined,  44 ;  it  can  be  measured  sufficiently  for  practical  pur 
poses,  44. 


238  INDEX. 


w. 

Wages  of  labor,  high  when  good  land  is  abundant,  78 ;  they  gradu 
ally  fall  with  the  progress  of  population,  79;  this  may  be 
checked  by  circumstances,  81 ;  what  circumstances  raise  or 
lower  wages,  81 ;  what  their  minimum  rate,  82. 

War,  sometimes  the  recourse  to  it  necessary,  197;  the  best  mode 
of  carrying  it  on,  198 ;  the  proportion  of  population  that  can 
be  employed  in  it,  198. 

WasJiington,  George,  an  example  against  the  self-nomination  of 
candidates,  129. 

Water,  when  it  has  exchangeable  value,  36. 

Waters  of  a  country,  one  of  the  great  sources  of  national  wealth,  26; 
its  utility  in  yielding  fish,  26;  in  facilitating  transportation,  26; 
in  furnishing  a  motive-power,  26. 

Women,  the  importance  of  their  education,  216;  its  present  defects, 
216;  what  they  should  be  taught,  216;  the  employments  to 
which  they  are  competent,  217. 


THE     END. 


DAY  USE 


RETURN  TO:      CIRCULATION  DEPARTMENT 
198  Main  Stacks 


LOAN  PERIOD     1 
Home  Use 

2 

3 

4 

5 

6 

ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS. 

Renewals  and  Recharges  may  be  made  4  days  prior  to  the  due  date. 
Books  may  be  renewed  by  calling  642-3405. 


DUE  AS  STAMPED  BELOW. 

OCT  0  8  ZUUJ 

FORM  NO  DD6                       UNIVERSITY  OF  CALIFORNIA,  BbHKtLtr 
50M    5  03                                                 Berkeley,  California  94720-6000__ 

